They understood going into the contest CD rates and life insurance dividends can change. Markets change, and so do interest rates, but for this example, everything stays except Dave runs out of life insurance in thirty years at age 80. Sam has a waiver of premium should a disability appear. Their personal incomes were almost identical. Sam and Dave were both in a 12% tax bracket. In year 11, they decided to withdraw $49,250 to purchase a new bass boat and start fishing at a few local bass tournaments. They are repaying $13,887 over the next four years to cover their boat purchase. They only borrowed money once from their account during this 30-year period. Realize that Dave is paying $5647 for his 30-year term life.
Dave’s CD vs. Sam’s Privatized Family Banking — 30-Year Results ($49,250 each over 10 years, age 50 start)
Dave’s Plan: Taxable CD @ 4.1% (3.61% Net)
Sam’s Privatized Family Banking (PFB)
Dave’s tax bracket: 12%
Sam’s tax bracket: 12%
Annual payment: $49,250
Annual payment: $49,250
Years to fund accumulation: 10
Years of fund accumulation: 10
Annual Cost of Term Insurance: $5,647
Years fund access: 30
Year of boat purchase: 11th
Year of boat purchase: 11th
Loan amount: $49,250
Loan amount: $49,250
Amortized Loan Payment: $13,588
Amortized Loan Payment: $13,588
Repayment Years: 4
Repayment Years: 4
Critical Illness Benefit: None
Critical & Terminal illness (2 of 6): Yes
Result at end of 30 years:
Result at end of 30 years:
Death Benefit: None
Long-Term Care Benefit: Included
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