TIME TO PLAN AHEAD…IT’S GO TIME!
Learn more in “What is your Life Expectancy? You’re Likely to Live Longer!”.
There are basically two types of life insurance policies with many different product variations to consider:
(1) TERM INSURANCE offers various rate guarantees for a period of time.
(2) PERMANENT LIFE INSURANCE intended to be in-force for as long as you live or to age 100 and beyond. Term life insurance protects against early death. Permanent life insurance protects against an early death and a long life. Would you agree the best life insurance policy should protect against both consequences of dying too soon or living too long?
Can this be accomplished? YES!
Here’s the disconnect in life insurance planning. Most people want life insurance for a lifetime (permanent life insurance), but only want to pay for a period of time (term life insurance). What tends to drive the decision? MONEY!
Remember the need for cash never goes out of style.
It just changes over time!
For more info, see “Life Insurance ‘Your Valuable Silent Partner’ and
‘Life & Rethinking Life Insurance Going Forward –
Aging Changing Priorities in an Aging Changing World'”.
THE PERFECT COMBINATION
HOW TO GUESS AND WIN AT THE SAME TIME?
Here’s how to guess and win at the same time? There is certainly value with term life insurance as long as it is with the right company who provides you with a good “escape clause” to favorable permanent life insurance products including whole life insurance. Here is a planning strategy I have recommended to my client’s over the years. Let’s assume you need $1,000,000 of life insurance. Maybe you can afford the entire amount of permanent life insurance, let’s assume you can’t. Here’s how to make permanent life insurance more affordable. What about purchasing $100,000 to $250,000 of permanent life insurance with the remainder being term life insurance that can be exchanged to more favorable permanent life insurance with the same company as early in life as cash flow allows or at the appropriate time in the future? This way you have an exit strategy out of the term insurance with permanent life insurance for a lifetime.
Like many insurance advisors who have been in the insurance business for a number of years. I have a vantage point that allows me to look backward and forward at the same time while sharing my personal observations on term and permanent life insurance.
What has worked and not worked?
Why are many of my clients who purchased term life insurance and who are approaching the end of their term rate guarantee now interested in another life insurance policy?
I have had other clients who purchased permanent life insurance recognizing life insurance was a long-term need and even though these policies continue on none of them have performed as originally illustrated.
Have my beliefs changed over the years? Absolutely!
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I believe life insurance CA$H is needed for an entire lifetime. You can earn it. You can invest for it, or I can help you create it with life insurance.
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I believe in life insurance that is measurable and predictable with contractually guaranteed premiums. This can include level term for a period of time with a good “escape clause” to whole life insurance or guaranteed universal life insurance to age 100 and beyond.
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I believe insurance companies stand behind their contractually guaranteed premiums with the understanding you have met your end of the agreement by paying premiums on time.
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I believe there is comfort in knowing your premium is guaranteed rather than a premium that is projected to remain level and subject to change based on current assumptions. I do not believe or trust any life insurance policy with projected level premiums based on current assumptions that are not contractually guaranteed. They can change, will change, and I have seen them change. This can only benefit the life insurance company in the future, not you!
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I believe in guaranteed cash values and guaranteed death benefits with whole life insurance.
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Even though cash values tied to an index crediting strategy (IUL) or sub-investment accounts (VUL) are quite popular. Numbers look great projected on an illustration. Are they predictable? How will these policies perform many years into the future, and if they underperform what impact will they have on a projected level life insurance premium if not contractually guaranteed?
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I believe insurance companies pay claims and save lives financially. I have seen insurance companies go above and beyond and do the right things when not required. They never get enough credit when these situations occur.
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I believe the best insurance company or life insurance product is the one paying benefits or a claim on a policy? There is no one best company or product.
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I believe insurance companies in the United States and throughout the world represent good for their insureds, citizens, and society. They are dynamic financial institutions and not charitable concerns. They must remain profitable in order to pay benefits and claims.
