Many financial writers have advised the public for decades about the virtues of term life insurance. Their basic assumption is that term life insurance is low cost. Let's see if this is always true.

A male, 30 years old, can purchase a term life policy with a guaranteed annual premium of $395 for $500,000 of coverage from certain life insurance companies. This premium may sound like a low cost, but here are important facts to consider before making that conclusion:

The premium cost is $395 x 20 yrs. = $7,900. This seems to be low cost, but this person and his family will lose over $1,000,000 if he lives to his life expectancy or beyond! Here's why:

If the $395 premium had been invested instead for 20 years at a hypothetical 10%* (example Roth IRA), it would have grown to $24,886 by age 50. Even though the term policy may be cancelled at age 50 (because the person might say he doesn't need the insurance any longer), the lost opportunity cost cannot be cancelled and mathematically speaking could continue to grow larger and larger throughout the remainder of his life. Suppose he lived to age 90. Then: the $24,886 loss at the hypothetical 10% for 40 more years would increase to $1,126,322. However, since the death benefit was cancelled, the family could also incur other asset losses at the ultimate death such as income taxes, estate taxes, probate fees, court costs, legal fees, accounting fees, and possibly a forced sale of assets.

In this hypothetical example above, the term policy could have cost this man and his family approximately $1,626,322.

The LEAP^® SYSTEM estimates the total costs of your own individual term or group policy over your lifetime. LEAP will show you strategies designed to try and help you acquire the same death benefit coverage without losing assets while recapturing opportunity costs, and at no additional out-of-pocket outlay on your part.

*For illustration only; does not represent any specific investment.