The Motley Fool Discussion Boards
Investing/Strategies / Retirement Investing
|Subject: Re: Hi gang... wow!!!||Date: 9/14/2013 7:48 PM|
|Author: Dwdonhoff||Number: 72843 of 80006|
Looks like the life insurance is $250,000 level term, with the premium increasing each year. BTW, I thought it cute that they ran the illustration out to age 120. ;-)
No, actually I solved for the 1st year minimum non-MEC death benefit allowed on the funds we are dumping in ($15k lump, plus $150/month.) That came to $810,334 in death benefit.
Then I blended it to be fulfilled by 80% increasing annual term, and 20% underlying base policy (basically full-fat 'whole life style' premium costs... but exploded out in unwrapped fees, and minimized to the thinnest amount Allianz allows, for performance.)
I ran that blend through year 7, which was the earliest point that Allianz' interpretation of IRS code formulas allowed me to drop the 80% term blend, and find the absolute lowest amount of remaining base coverage allowed, on an increasing basis, to keep the tax advantages in place. On the IRR report you can see in year 8 the combined DB dropping from $843k down to $286k, and then rising per IRS code from there, at the least amount required by the laws to keep the tax bene's in place.
Starting at age 67, the life insurance premium is LARGER than the $1800 deposit, so rather than adding to the investment, the investment is being drawn down to pay for the life insurance.
Actually, its at the end of age 68, beginning 69... but you got it. The growth yield is sufficient to cover the internal cost shortage, and still grow the account (and that never reverses.)
Nonetheless, that's more-or-less okay. When you retire that's when you switch from accumulation to decumulation -- so that's the point at which you stop adding to the investment account and begin withdrawing from it.
We'd turn off income premiums the year prior to turning on distributions. I didn't dial that into this illustration... just did a vanilla pay-in all the way to maturity (dirt nap.)