NICHOLASVILLE, Ky., Jan. 12 /PRNewswire/ -- Compulife Software has
enhanced its www.term4sale.com term
insurance comparison service by adding an
Income Replacement Calculator to assist consumers in determining how
much life
insurance they need to protect their families.
www.term4sale.com gives consumers instant
access to the best term
insurance premiums from over 150 life companies. The service is free
and can
be used without obligation. The company does not require consumers
to
identify themselves. Unlike virtually all other websites comparing
term,
Compulife argues that its site is the most unbiased because Compulife
doesn't sell life insurance. www.term4sale.com
uses the same extensive
term database that Compulife sells to over 3,000 agents.
Compulife president Bob Barney argues that most consumers are badly
underinsured. He says the reason is simple, most don't understand the
financial value of their life. Barney said, "If a consumer dies with
too
little insurance, they'll never know they made a mistake. It's the
family they leave behind who will discover the problem and only after
it's too
late to do anything about it."
Barney argues it's extremely simple to determine how much insurance
you
need. The first step is to realize that when you die the thing that
dies
financially is the paycheck that you brought home. If you earn $30,000
per
year then your family loses $30,000 per year. If you can ensure that
your
family will get $30,000 per year after you die, the problem is solved.
The next step is to determine how long your family will need that $30,000
per year. Barney recommends providing an income until the end of the
dependency period. If you have young children that could be 20 years
or
longer. To get $30,000 per year for 20 years you simply multiply one
number
times the other for a total of $600,000. Barney says if a consumer
bought
$600,000 of term insurance they'd leave enough money for their family
to do
the job.
Of course that simple calculation does not take into account the fact
that
$600,000 can be invested to earn interest and the calculation doesn't
take
into account that inflation requires more income each year to keep
up with
the cost of living. That's where the Income Replacement Calculator
comes in.
Entering $30,000, 20 years, 2% inflation and 5% interest, the system
quickly
calculated that it takes $461,960.
The program then gives the consumer a year by year illustration. It
shows
how the $461,960 provides the first year income with the balance invested
and
earning interest. Each year the 2% increasing income is drawn from
the new
balance and the remaining funds are reinvested. In the final year,
the
illustration left $43,700 which is exactly the amount of income needed
for the
20th year. At that point the funds are wiped out.
Barney says, "Most consumers are shocked to see the zero in the final
year. They find it hard to imagine that all that money is gone by the
end of
the 20 years." He believes the shock reaction underlines that most
people
don't understand the financial value of their life which is why they
buy too
little insurance.
Barney is concerned that most consumer advisors routinely suggest 6
to 8
times income as the insurance needed. He believes that that is too
little
insurance and also believes there is a particularly sad irony for consumers.
In the above example, using the 8 times calculation, a consumer probably
believes the proper amount of insurance is closer to $250,000; not
$450,000.
Barney points out that the extra $200,000 does not cost that much extra
when
you are buying term insurance.
To make his point, Barney gave this example. Having entered a birthdate
of January 1, 1966, in order to do a term insurance comparison for
a 35 year
old, Barney went on to tell www.term4sale.com
that the consumer was a male
non-smoker in the best of health (using a California zip code). The
system
quickly calculated that the cost of a fully guaranteed 20 year term
plan was
$180.
Barney then ran the same calculation, this time for $450,000. He found
that the lowest premium was $280; only $100 more. The consumer gets
80% more
insurance for only 55% more premium. Barney explained that with most
term
policies, the more insurance you buy, the cheaper your rate per thousand
becomes. He also stressed that the majority of consumers would gladly
pay the
extra $100 if they understood the numbers.
Barney believes that most insurance companies prefer using more
complicated methods for calculating insurance amounts because they
don't want
consumers buying larger policies. If most 35 year olds believe they
need
$450,000 of insurance, there is no way they could afford that amount
of
coverage by buying anything but term. Barney believes most agents prefer
selling higher priced policies and so smaller amounts of insurance
make that
sale easier. He likes to say that the smaller more expensive policy
may be a
great insurance program, as long as you don't die. Barney believes
most
consumers should be buying term insurance.
Compulife's public website is found at www.term4sale.com
For more information contact:
Bob Barney, President
(800) 798-3488
Compulife Software Inc.
FAX: (859) 885-3988
Term4Sale, Inc.
e-mail: barneyrl@concentric.net
108 Edgewood Plaza
Nicholasville, KY 40356
SOURCE Compulife Software, Inc.
Web Site: www.term4sale.com
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