Expense Or Investment??

Its no wonder many Americans don't have life insurance. According to “Why Have Life Insurance?’’ an October 9, 2015, article by Walid Petiri at Nasdaq.com, a study by life insurance advocacy group,

LIMRA, revealed that when asked, most Americans thought a 20-year $250,000 level term life policy for a healthy 30-year-old would cost at least $400 a year instead of the $150 it actually costs. With 83 percent of consumers without insurance, inaccurate information could be a likely cause. Then there are people who are paying for insurance that isn't a good fit for them, paying too much for their insurance or just have too little coverage to protect their family.

That's why it's important for you to annually review your policy. Reviewing life insurance policies is one way to ensure coverage is right for you and your family as you age and your family situation changes. For example, some of these policies build cash value with each premium paid, some invest cash value in the stock market, while others pay a fixed rate of interest, some have zero cash value; a few combine all these ideas.

According to Petiri’s article, finding the right policy may be easier than you think. There are really just two basic types of life insurance: term and cash value. Cash value or "permanent" life insurance policies offer death benefits and some investment qualities, as some of the money you spend on the policy goes into a savings program. Cash value policies have higher premiums than term policies because term life offers only death benefits during the policy term. Term can be a good option for young adults because it's pretty inexpensive.  Term life has its drawbacks, including if you outlive the term of the policy, the beneficiaries get nothing. Term life policies can be renewed however and some can be converted to permanent coverage.

The big question is: how long do you plan to keep the policy? If you'd rather not have to pay premiums for decades, term life may be more attractive, especially if you want a short-term hedge against the unforeseen or as wage replacement if you died prematurely, according to Petiri’s article. If life insurance is creating a legacy or paying estate taxes, permanent life insurance may be a better choice. As we age, however, it is important to know how to title life policies so that they are not victims of long-term care costs.

We’re delighted to talk with our clients before they spend money on a policy. Clients receive a complimentary consultation alongside their life insurance agent to ensure coverage adjusts over time as their family needs change. Click on the link below to register for our complimentary seminars for more information on this topic.