18 Apr 2019
One of the weaknesses of a Buy Term Invest the Rest with Early Critical Illness (ECI) involved is that Term ECI is so disproportionately expensive that BTIR is an incredibly risky move.
The math, when comparing the whole life plan rider to it's term 'benchmark' would require the invest-the-rest result to be about 6% annualized, which can be difficult to swallow for conservative investors and incredibly hard to achieve for undisciplined people (which is more likely even if you're good at investing).
Take this example (as an FA I'm discouraged from naming specific companies or plans)
It costs $1001 for this ECI Term plan for a 35 year old till 70 (34 year term).
For a 20 year WL + ECI (manipulating the multiplier), it costs $1432.
Total premiums paid for WL: $28,640
Total premiums paid for Term: $34,034
Cash value at 70 for WL: $29,000
Cash value at 70 for Term: 0
So assuming you don't claim, you pay $5000 less and get back $29,000 after 70 if you need it.
Yes, you could certainly invest the difference, but the difference isn't huge. So between the discipline, skill and small capital - it's challenging. If you''re up for the challenge, I can help you with that as well.
I'd love to help you if you let me. You can reach me via PM-ing me the link below.
It would be good to prioritise coverage for Critical illness, Death and disability prior to investments. This is to provide you with a minimum safety net should anything unfortunate event occurs while you continue your journey of wealth accumulation.
As for extending coverage beyond 65, there are term plans that provide coverage beyond 65.
As you are currently 25 to 30 years old, premiums for Whole Life Plans tend to be more affordable, and offers you a limited pay option of 10, 15, 20, 25 years so that u only pay premiums during your working years to obtain coverage for the rest of your life.
As for Whole Life Plans with early critical rider, please do take note of the fine print for the maximum amount claimable should a critical illness be diagnosed by a doctor.
Disclaimer: I am a financial planner with Manulife. You may PM me on Facebook to find out more
Hi there! This is a good question that you asked. Here i the best way to look at it, I'm completely ...
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