Buy/Sell Life Insurance

August 24, 2022

by a searcher from Indiana University at Bloomington in Chicago, IL, USA

Has anyone purchased buy/sell life insurance?

I'm in the very early process of trying to determine terms and coverage amount.

I want a large enough policy so that I don't have to refine the amount and be subject to a health audit as our companies continue to grow. But I want to balance that with price (e.g. I'm not willing to pay $15K/year for a $10M policy for 15 years).

I'd appreciate any insights or experience the community can share so that I can better frame my expectations and delineate between our wants vs needs.

Many thanks in advance.

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Reply by a searcher
from University at Albany, State University of New York in Sunnyvale, CA, USA

@Joe Rizzi and @Matthew Saskin - I am a licensed life/health agent in CA/IL/GA/WA and a few other states. I typically do a combination of term policies to mitigate the immediate risk in the short term. But if they have good cash flow and are looking to create a legacy for their family in a safe fashion, I would suggest a very particularly structured Whole Life to help them do Infinite Banking type concept if they need access to the cash in a short term (30 days+). That allows double dipping and uninterrupted compounding. However, if they are looking for long term cash accumulation, I tend to structure certain IULs that minimize the death benefits but maximize the cash accumulation for future personal pension structures that beat most annuities easily. After paying off all the insurance costs etc., it ends up being very competitive with investing in a mutual fund or with a money manager, but without the downside risks, and the returns we have seen vary from guaranteed 4-6% to 8-10% typically and can be as high as 30-60% or more. The right answer is usually a combination - depends on the goals, risk tolerance, age, health and many other factors. DM me or text me at###-###-#### if you want to look closer.

Reply by a searcher
from Rensselaer Polytechnic Institute in Durham, NC, USA

My .02c, based on how I've structured things for myself:
1 - I have a term policy that, when issued, was designed to be large enough to cover (a) living expenses for wife + kids until the kids are in college, (b) fully fund college for both kids, and (c) pay off all debt on primary residence plus several commercial properties.
2 - Since then, as we've purchased more real estate w/ recourse debt I've simply purchased additional term policies that are designed to cover the debt on those
3 - In the midst of an SMB acquisition so will likely need a 10yr term to cover SBA requirements
etc...

Basically, my initial term policy covered "the basics" (well, more than the basics depending on definition...) and incremental policies (which admittedly cost. more as I get older) cover additional debt, etc. over time.

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