GET INSTANT TERM LIFE QUOTES HERE! CHECK THIS OFF YOUR LIST NOW!  YOU'LL BE SO GLAD YOU DID!

Tag Archive

Tag Archives for " Financial advice "

WHOLE LIFE SUCKS!

Is a Whole Life Insurance Policy a Good Investment? nope!  and it pays me so much more!





There’s a lot of conflicting information on life insurance. One of the most frequent questions agents encounter is whether whole life is a good investment. The answer may surprise you and leave you just as confused.



The first thing insurance buyers need to understand is, “What is whole life?”



Life insurance markets used to be fairly simply. Today, however, insurance companies offer a wide range of products and policies tailored to individual needs and financial goals. Term life is a traditional life insurance product that has a defined period of validity — or term — during which a death benefit may be paid.

On the other hand, whole life policies generally refer to a group of products that pay a permanent death benefit, but also accrue cash value over time.

Whole life policies may earn interest, be diversified in portfolios, and have loan and early withdrawal options. They are often considered an investment product and a life insurance policy in one. Typically, they cost more than common term insurance and owners may choose to pay in additional funds up to a certain cap.

Whole Life vs. Savings Accounts or Certificates of Deposit

Some financial planners compare whole life policies to traditional savings accounts with restrictions on withdrawals, money markets, or long-term CDs. While whole life policies earn interest, they do so at much lower rates than true investment products.

If you’re looking for a high rate of return, then a whole life policy would not be the best investment option. However, if you prefer long-term stability with a minimal return plus the added protection of a secure death benefit, then your whole life insurance policy may be a good choice.

If your primary concern is passing the investment on to beneficiaries, then a whole life policy has several advantages over savings accounts:

  • Growth is non-taxable
  • Interest generally accrues more quickly
  • Tax liabilities are reduced

Whether you’re starting a policy on payments, or have a sum to invest with beneficiaries in mind, then whole life can provide a moderate investment option against traditional savings and CDs.

I Want to Use Whole Life as a Retirement Tool- only if you want to pay me a fat commission!


Again, your primary goal will decide whether whole life can provide an effective investment for your financial needs. Many experts decry whole life as a true investment because of the high costs and lack of liquidity. However, if you’re young and have a steady career income, leveraging a whole life policy for retirement can be an effective strategy that pays off.

It can take twenty years for returns in a whole life policy to offset the front-end costs, so a person purchasing a policy at 35 could potentially reap the benefits during early retirement years. In such a circumstance, the policy could be considered a successful investment vehicle.

Whole life may also provide an option when the owner is already making maximum contributions to other retirement investments like an IRA or 401(k). On the down side, however, life insurance can have tax pitfalls and be costly without permanent income.

Make Whole Life Part of a Well-developed Investment Plan-- as an investment, whole life sucks!

Most financial planners and experts agree on one thing in relation to whole life plans: They can be a good investment when combined with other financial products.

Solid financial planning begins with incorporating a wide range of products and investments in your portfolio. When whole life policies are added to stocks, retirement accounts, savings, and other investments, they account for the strongest long-term strategy and still provide a reliable death benefit.

If you’re considering a whole life policy as an investment strategy, do your research and speak to an agent. Like any financial product, there is no simple answer and whether it turns out to be a good investment depends on your individual needs and situation.



is whole life a good investment
profile-pic

If you need an insurance professional who knows the industry, listens to your needs and works hard for you, Chris is your man.

If you need an insurance professional who knows the industry, listens to your needs and works hard for you, Chris is your man.

We have trusted Chris with all our insurance needs for several years. He always listens and understands our needs completely and then works hard to design a policy that best fits our needs. He is very personable and easy to work with.

Sanjeev Dharap Architect, Entrepreneur, Technical Advisor
profile-pic

Expert Advice and Honesty

Chris brings expert advice and honesty to every project we work on. He gets things done in a timely manner and does an excellent job following up.

Brad Branson Partner/Investment Adviser- Cornerstone Capital, Inc
profile-pic

Didn't Try To Upsell Me!

I found Chris when looking for life insurance brokers. I knew exactly what I wanted and told Chris and he was able to deliver without trying to upsell me on something else. It was very straightforward and exactly how I hoped it would be. I would definitely recommend him for anyone in a similar scenario.

Nathan Netravali Associate Director of Clinical Applications at Think Surgical
profile-pic

CB Acker Associates Is Extremely Responsive

Chris provided (and continues to provide) excellent service and support for our insurance needs. He is very responsive, knowledgeable and provides specific and efficient solutions to our insurance needs. I highly recommend Chris!

Antonio Altamirano Founder, CEO at Tangelo

Keyman Insurance For Your Business

Insuring a Key Employee Can Protect Your Small Business


Keyman Insurance protects your Business

Small business owners like you know the value of an employee who makes the company tick. She’s the person you and everyone else rely on and the key person who plays a crucial role in the daily operations and future success of your company. To protect your investment and long-term financial goals, you should consider a keyman insurance policy.

With a keyman insurance policy, your company is the beneficiary. In the event that a dedicated and trusted employee dies unexpectedly, or becomes disabled, you can count on financial support to fill the gaps. Too often, the passing of an essential member of the company spells disaster for a small business. A key man insurance policy provides crucial financial relief during a time of loss that affects you and your employees.

The Team MVP is a Valuable Asset to Your Company

Keyman insurance is a policy owned and paid by your company to cover one irreplaceable staff member. Policies generally refer to life insurance, but may include disability coverage, too. Both types of  insurance can help offset the costs of an unexpected loss or absent employee.

When choosing your key employee, you should rely on individual knowledge related to performance and skills. Every employee is a valuable asset to your company, but in some instances, there's one or two especially essential people who play a major role in the company by making vital and sustaining contributions. The key employee you choose to insure may be the person who:

  • creates direct earnings and profits
  • secures and develops relationships with important clients
  • possesses a special talent or knowledge that drives your business

Because of the employee’s special influence in daily business operations, replacing her may be especially costly. Your keyman insurance policy will account for any potential loss, enabling your company to rebound following a death or disability.

Plan Coverage Around Your Business Needs

When you’re shopping for a key man policy for your small business, consider these factors:

  • What will it cost to hire and train a new employee?
  • Will there be a loss of productivity and income?
  • How much can the business afford in premiums?

Ask your agent for a variety of different quotes and options from whole life to term policies. Remember, you’re protecting an investment you created. Other employees and people in the community depend on you to be able to keep going — even after a tragedy. You can’t plan for every unexpected event, but you can be prepared.

Sometimes the death of a close employee may present hidden or unforeseen expenses. Know your company and your employees. Consider how other team members, regular customers, and the employee’s family will react when planning how your business will carry on.

It is impossible to put a price on human life, or an individual’s valuable contribution to your business. However, being prepared with an affordable policy and added coverage can reduce the impact of an unexpected and untimely death.



Key Person Insurance Demonstrates Your Compassion and Responsibility


Purchasing a life insurance policy on an employee is more than just smart business practice; it is a demonstration of personal involvement and appreciation for an individual’s contributions to your company’s goals. Additionally, it shows your compassion and a human consideration for unexpected life events that may affect everyone close to your business and employees.

There are many personal stories about businesses responding to the loss of a standout employee. Advance planning with key man life policies will enable you to go the extra mile when tragedy strikes. In the end, offering a family some unexpected financial assistance, providing for a survivor’s special needs, or allowing other employees the opportunity to grieve by taking time off will be the greatest benefits to your business.

Insuring a Key Employee Can Protect Your Small Business


Source: Pexels

Source: Pexels


profile-pic

Didn't Try To Upsell Me!

I found Chris when looking for life insurance brokers. I knew exactly what I wanted and told Chris and he was able to deliver without trying to upsell me on something else. It was very straightforward and exactly how I hoped it would be. I would definitely recommend him for anyone in a similar scenario.

Nathan Netravali Associate Director of Clinical Applications at Think Surgical
profile-pic

Expert Advice and Honesty

Chris brings expert advice and honesty to every project we work on. He gets things done in a timely manner and does an excellent job following up.

Brad Branson Partner/Investment Adviser- Cornerstone Capital, Inc
profile-pic

If you need an insurance professional who knows the industry, listens to your needs and works hard for you, Chris is your man.

If you need an insurance professional who knows the industry, listens to your needs and works hard for you, Chris is your man.

We have trusted Chris with all our insurance needs for several years. He always listens and understands our needs completely and then works hard to design a policy that best fits our needs. He is very personable and easy to work with.

Sanjeev Dharap Architect, Entrepreneur, Technical Advisor
profile-pic

CB Acker Associates Is Extremely Responsive

Chris provided (and continues to provide) excellent service and support for our insurance needs. He is very responsive, knowledgeable and provides specific and efficient solutions to our insurance needs. I highly recommend Chris!

Antonio Altamirano Founder, CEO at Tangelo

I’m a Senior Citizen and I Forgot to Buy Life Insurance In 2017!

I’m a Senior Citizen and I Forgot to Buy Life Insurance!



Have you retired and realized that you don’t have the life insurance coverage you want or need?


We all make mistakes and in our busy daily lives, forget to attend to some of life’s most important details. Age can be a sudden reminder of what we were supposed to do.

Don’t be embarrassed…buying life insurance is something many people ignore or put off. Perfect financial planning doesn’t happen when we want it to, and we wake up one morning in a panic.

If you’re 55 or older, you may think life insurance is out of reach. High premiums, medical exams, and pre-existing conditions are not insurmountable. There are different options for seniors like you to make life insurance possible and affordable.

So whether you have a new grandchild you want to provide for, or you’re thinking of another personal reason to buy now, there are many choices to consider.

Is it Too Late to Provide for My Family?

It’s no surprise that a lot of senior citizens have questions about life insurance. A top concern is that it’s too late to purchase a policy. It’s crucial to remember is that it’s never too late to consider life insurance as part of a sound financial plan. Providing for your family is too important to give up because you think you may have missed a deadline.

Life insurance protects your family’s assets from a wide range of final expenses, and you’re never too old to make sure they have the financial resources for:

Funeral, burial, and cremation costs

Outstanding debts like a reverse mortgage or a forgotten credit card

Unexpected medical bills not covered by Medicare or insurance

Just last year, the cost of a funeral in the U.S. was more than $11,000. Imagine leaving your loved ones without life insurance to cover those expenses and others. Bills can burden surviving spouses, children, and other family members. Before you decide it’s too late to purchase a life policy, get the facts and protect the ones you love.

You Can’t Plan for Everything When You’re Young

Everyone shops for insurance when they’re young. That’s the old way of buying insurance.

Mature adults like you are retiring later and living longer. Life goes on after 60 and sometimes seniors may not have expected another 20 years. They may have special financial concerns not related to survivorship, or be enjoying the best years of their lives.

There are many reasons that today’s older adults are looking at life insurance:

Newly acquired debt — whether it is a new RV purchased to travel the country or a credit card used for a few extravagant perks, a life insurance policy will ensure that your estate does not end up in the red.

Legacy planning — did you discover a new passion late in life that deserves support? Many seniors today are establishing trusts, scholarships, or other charitable contributions as an ideal way to make a lasting difference.

Disabled relatives — when a child or family members suffer a sudden and catastrophic health problem, life insurance can provide the financial security and help close the gaps left by medical bills.

We all know that life can move fast. Priorities change and plans go out the window. You’ve earned the right to change your mind and make new plans — no matter what your age.

Discuss your special needs with an insurance agent to find out how to adjust your financial planning to fit your new senior lifestyle.

Explore the Market

By now, you’ve probably watched enough television ads on nightly television. They promise affordable premiums and benefits supposedly tailored to meet your needs, but do they really know you or the reason you’re buying insurance?

With age comes wisdom, and it’s always better to investigate before you settle on a 1-800 number answered a thousand miles away. You waited this long to find the right policy, so there’s no need to rush into a product that won’t meet your needs. Remember, it’s never too late to take the time to find the insurance option that suits you.

I’m a Senior Citizen and I Forgot to Buy Life Insurance!
profile-pic

Expert Advice and Honesty

Chris brings expert advice and honesty to every project we work on. He gets things done in a timely manner and does an excellent job following up.

Brad Branson , Partner/Investment Adviser- Cornerstone Capital, Inc
profile-pic

Didn't Try To Upsell Me!

I found Chris when looking for life insurance brokers. I knew exactly what I wanted and told Chris and he was able to deliver without trying to upsell me on something else. It was very straightforward and exactly how I hoped it would be. I would definitely recommend him for anyone in a similar scenario.

Nathan Netravali , Associate Director of Clinical Applications at Think Surgical
profile-pic

CB Acker Associates Is Extremely Responsive

Chris provided (and continues to provide) excellent service and support for our insurance needs. He is very responsive, knowledgeable and provides specific and efficient solutions to our insurance needs. I highly recommend Chris!

Antonio Altamirano , Founder, CEO at Tangelo

if you've already worked with us, please let us know how we did for you and what we could do better. 

please take a minute to complete the form below--it truly helps us improve our process!

In couple of sentences, could you please describe how you found us?
Could you please describe how much research you did before choosing to work with us? Why did you decide to work with us when you have many choices in this crowded term life insurance space?
In a few words please tell us about our process--how easy or difficult was the policy underwriting process--medical exam, scheduling, forms getting signed- any issues or positive thoughts?
What could we do better?

Are You Paying More For Life Insurance Than you Should?

PAYING MORE FOR INSURANCE THAN YOU NEED TO

I was featured in an article by Crystal Brown for magnifymoney.com. Many folks don't realize how much they are paying for life insurance or what kind they even have. If you want to save money on your life insurance policies, please read and share. Let me know what you think!

 

Here's Crystal's article.  Thanks again to Crystal Brown of Phoenix who wrote this balanced piece!

Paying Too Much For Life Insurance

 

Tiffany Hamilton knew as a college student that she would one day be an entrepreneur. With that in mind, she made sure to enlist the help of a financial planning company when she bought her first life insurance plan at 21, as she was just getting her start in real estate.

 

Why Buy The Wrong Kind Of Policy?

 

That first policy was a $20,000 term-life plan that cost her about $80 a month. When her salary increased, she decided she needed more coverage than that. As a single woman with a burgeoning business, she wanted to make sure she had enough coverage to take care of any debts and leave something for her mother.

 

Why Would A 25 Year Old Need $1Million Of Whole Life Insurance?

 

Her insurance representative at the time encouraged her to up her coverage. So at 25, she converted her policy to a $1 million whole life policy.

“I thought by going to a financial planner, sitting down and answering the questions, and then going off of their recommendations, I thought I was doing the right thing,” Hamilton told MagnifyMoney. “Yes, the $1 million would give my mom X, Y and Z, but was that in my best interests?”

Now 35 and running her own real estate business based in Tallahassee, Fla., Hamilton has lately been wondering: Is it possible to be overinsured?

How much insurance is too much insurance?

As we grow in our careers, home life and families, paying for life insurance becomes another one of those obligatory items on our financial to-do lists, like establishing a 401(k) or an emergency fund. But the sheer volume of life insurance options available may have created a unique problem: Some of us might be overly insured. That is, our insurance coverage may be wildly disproportionate to our salaries and overall net worth.

Joel Ohman, a Tampa, Fla.-based certified financial planner and founder of Insuranceproviders.com, said it’s also easy to end up with a policy that has more bells and whistles than you genuinely need.

Generally speaking, life insurance is a type of coverage that provides a payout to a selected beneficiary in the event of the policyholder’s death. This is often called the “death benefit.” Many people aim for a death benefit that includes a payout substantial enough to cover a few years of the deceased’s salary, funeral expenses and any outstanding debts.

Those with families may also want to include money to pay off a house, children’s college funds and more.

Of course, there are other options for anyone who has a large estate, want to make charitable contributions, needs special tax breaks or has other complicated financial circumstances to consider.

“Unless there are complex estate planning requirements or the insured has exhausted all other investment options, then typically the idea to use life insurance outside of a straightforward death benefit payout is a fool’s errand that will only result in a fancier car for your insurance agent,” Ohman said.

The cost of being overinsured

The difference in premiums between insurance plans can be striking, and if you’re not sure precisely what to get, it’s easy to throw up your hands in frustration. But if you simply choose a plan that may “sound right” without carefully exploring all your options, you could easily wind up paying for more coverage than you need.

Most insurance websites include insurance calculators to make it easy to figure out what your costs could be for a variety of different plans. Using State Farm’s calculator for example, a $500,000, 20-year term policy for a 30-year-old woman in Arizona is about $33 a month. Comparatively, a whole-life policy is $460 a month. That’s a difference of nearly $5,000 a year.

In Hamilton’s case, she realized she was paying thousands of dollars more for insurance than she needed to. In 2016, she converted her $1 million whole-life policy into a $500,000 universal-life policy.

“That cut my budget down by almost $10,000 a year,” she said.

John Barnes, a certified financial planner and owner of My Family Life Insurance, said those cost savings can be important for families.

“My take is, you can be doing something else with that money,” he said. “Families today are squeezed. I’m not about to overextend them, I’m going to get them the right amount.” The additional savings, he said, could go toward retirement, college tuition or other financial need.

Ohman said that a simple term-life policy is a great way to get inexpensive insurance that will still take care of most families’ needs.

“When people are looking for pure life insurance, they want to protect their loved ones if something should happen to them, and they want them to be financially taken care of in a worst-case scenario,” he said. “Ninety-nine percent of the time, then, that cheaper term life insurance product is going to be the best fit.”

Chris Acker, a chartered life underwriter, chartered financial consultant and independent life insurance broker in Palo Alto, Calif., said he almost always recommends term-life insurance to his clients, particularly young families.

“If you’re talking about people in their 30s,” Acker said, term insurance “is hands down the best way to go.”

That’s because it’s an inexpensive way to get insurance that provides coverage for your entire family. Plus, you can always get additional insurance later. But he cautions against applying one piece of advice across all situations.

“The bottom line is, there’s no right answer,” he said. “No two cases are the same.”

2 Types of life insurance

There are two main types of life insurance: Term insurance and permanent insurance. When consumers typically think about life insurance, they are looking for an option that will provide their families with financial stability if the unthinkable happens. If you work full time for a company, it’s possible that your workplace has a some type of life insurance policy, often equal to one year of the employee’s salary.

But some experts recommend that families purchase their own insurance plan outside of their employer because employer-sponsored life insurance typically falls short of their family’s actual needs.

Permanent insurance does exactly what the name implies: It provides lifelong coverage. In addition to the death benefit also provided by term-life insurance, permanent insurance also accumulates cash value. But with that added benefit comes pricier premiums.

Types Of Life Insurance

Whole life is the most common type of permanent insurance. With a whole life policy, the premium never changes. Part of the premiums goes into a savings component of the policy, which builds cash value and can be withdrawn or borrowed. That cash value also has a guaranteed rate of return.

Variable life offers the same death benefit, but allows consumers the option to seek a better return by allocating premiums to investments like stocks and bonds.

Universal life lets you vary your premium payments and gives a minimum death benefit as long as the premiums are sufficient to sustain it.

Variable universal life insurance is a sort of mix between variable and universal life, meaning consumers can vary premium payments and can also allocate them among investment subaccounts.

Best for: Those who want a policy that offers cash value and stable premiums. There are also tax advantages to this type of policy.

Best for: Those who want the same advantages as a whole-life policy, plus the option of allocating premiums toward different stocks and bonds.

Best for: Those who want the same advantages of any permanent policy with the option of varying premium payments. For example, those who may want to start with a lower premium that increases as their finances do

Best for: Those who want the option to vary premium payments, but also the option to allocate those payments toward different stocks and bonds.

​​Term-Life Insurance

Term-life insurance provides coverage for a specified amount of time — let’s say 15 or 20 years. Customers pay a premium each month and are covered through the specified term. This is typically the cheapest insurance option.

Best for: Those whose need for coverage will disappear or change at some point, like when a debt is paid or children reach adulthood and go to college. Also good for those looking for a low-cost option.

Even within term- and whole-life insurance, there are additional products you could be offered, like mortgage life, return of premium (in which your premium is returned if you outlive your initial term) and final expense (which covers just funeral expenses). There’s even an option that would provide lifetime protection for your estate upon your death. With all the available options, it’s easy for the costs to add up.

Tips to choose the right life insurance

Use a life insurance calculator. Wealthy families, those with special-needs family members and others in unique situations will also have different insurance needs. Most insurance websites offer calculators to help consumers decide how much coverage to take. The consumer website lifehappens.org also offers step-by-step guidance on choosing insurance, along with a needs worksheet.

Get multiple free quotes. Consumers can also get free quotes from multiple insurers from sites such as My Family Insurance, InsuranceProviders.com and http://myfasttermquotes.com/, which are independent-agent sites for Barnes, Ohman and Acker. Keep this in mind: Getting a quote doesn’t obligate you to work with a particular company or insurer.

Choose the right advisor. It’s also important to understand that hiring an insurance agent or financial planner is just like any other relationship: You want someone who works best for you and inspires comfort. Hamilton said she not only interviewed potential reps this last go-around, she also requested references and asked them about their company philosophy before making a decision. LifeHappens suggests that consumers use referrals to find an insurance provider.

Seek out independent agents. When it comes to actually choosing an agent or financial planner, Ohman suggests looking into independent agents that aren’t tied to a particular insurance company. That’s because a “captive” agent can only recommend those products that his/her company provides, whereas an independent agent can recommend any number of companies. That doesn’t mean they don’t have your best interests in mind, just that they aren’t able to provide customers with options outside their company offerings.

“The only products that they know about, the only products that they’re even allowed to bring to your attention,” Ohman said, are “their own products.”

Understand what it means to be a fiduciary. Another thing to consider is whether the company or adviser you’re working with is a fiduciary. “One of the big advantages you get with working with an insurance agent who has that CFP designation is that they are supposed to be working as a fiduciary, which means they put your financial interests first,” Ohman said.

Those who hold a CFP designation like Ohman are expected to provide fiduciary care to their clients. It’s also perfectly OK to ask your agent if he or she is, in fact, a fiduciary.

By the way, this doesn’t mean that other agents can’t or won’t provide clients with the type of insurance that works best for them. But don’t hesitate to ask if they’re paid on commission and whether a bonus or trip is tied to a particular transaction.

Check the insurance company’s ratings. Once you get a recommendation, he says, make sure the company has at least a A rating or better from independent agencies that rate companies’ financial strength. There are four independent agencies that provide this information: A.M. Best, Fitch, Moody’s and Standard & Poor’s. Do your research and find the ratings from each of the four agencies, because some companies may highlight a positive rating from one agency and play down a lower rating from another agency.

Trust your gut. Barnes said regardless of whom you choose to represent your insurance needs, make sure you have a level of comfort.

“Don’t be discouraged, there are some great independent agencies,” he says. “If it doesn’t feel right during the process, trust your gut.”

That means continuing to be open-minded, but also not allowing yourself to purchase an insurance product you don’t want or can’t afford. During that first meeting or so, Barnes says the agent should spend time getting to know you and your situation without necessarily trying to sell you on a product.

Similarly, Acker says it’s OK to question your agent to make sure you’re getting the best policy for your needs and lifestyle: “Don’t be bullied into buying what someone else says you should buy.”

For her part, Hamilton says she also looked into whether companies were commission- or fee-based. That’s because a fee-based company will charge a set rate, which can ease the worry of having an overzealous rep who may offer expensive products to boost his or her commission.

Because many good policies also offer a conversion option, you’re not “stuck” forever with something that doesn’t actually work for you. That means you have the option to change policies, as Hamilton did. Some consumers also choose to buy additional policies down the road.

But, and this is key, you shouldn’t let uncertainty or the fear of overpaying keep you from getting at least a simple policy.

“Think about today — the immediate need; protect that right this second,” Acker says. “Then that gives you time to work on your financial planning. Then you can figure out if you want to keep the insurance.”

If you want to see how much money you can save on life insurance premiums, hit the quote button below and run some numbers for yourself!  You get instant quotes that won't cost you anything!

You Still Own That Life Insurance Policy and You’re Retired? WTF? You’ve GOT To Be Kidding Me!

Why Use Life Insurance During Your Retirement years? Or Why I Have a Love/Hate Relationship With Financial Media

 

I’m posting an article which appeared on Forbes online recently which discusses the use of permanent life insurance during one’s retirement years.  While I am a huge proponent of term life insurance, I do appreciate some of the points raised by the author-mainly, that it’s very difficult to create absolute profiles in which each client fits.  Rules-of-thumb and cookie cutter solutions need to be ignored when you think of your own financial situation.  Do you WANT to own life insurance when you pass away, no matter if it’s tomorrow or age 120?  

Financial Media Don’t Deal Directly With Families

 

People often forget to account for their own desires when considering whether to keep an existing life insurance policy or let the policy lapse simply because they’ve reached age 65 and they’ve been told that they “don’t need life insurance beyond age 65”.  I’ve been helping families protect themselves financially with life insurance since 1985.  In that time, I’ve settled several dozen claims on life insurance policies where the owners were over age 65 and NONE of the families ever complained that they were not “worthy” of receiving the policy proceeds that their retired spouse/parent’s policy paid.  I take issue with populist financial media “entertainers” who make blanket statements that no one needs coverage beyond a certain arbitrary age.  Generally, most people cannot afford to maintain a term life policy forever.  Those policies were never designed to be kept in place beyond a specific “term of years”.  Term life policies can be partially or entirely switched over to permanent plans if families’ circumstances change- all without proving good health.  this is a HUGE benefit of owning quality term insurance.  You have the CHOICE to keep the policy if you WANT, not because Dave Ramsey or Suze Orman told you to dump the policy at age 65… As always, you can go to the button on this page to check how affordable good term life insurance can be for you and your family.  I know you’ll make the right decision about what’s best for your own circumstances.

 

Remember that many, if not most, financial content providers are paid affiliate fees or compensated indirectly in other ways by the financial products they “review” or mention.  One thing I appreciate about the Forbes piece is that the author has interviewed real insurance/financial professionals.  No one has made sweeping blanket statements about the “evils” of owning and paying for life insurance, especially permanent insurance, into our later lives.  It’s not a bad thing if a family wants to actually keep life insurance on the books to provide instant cash and peace-of-mind for loved ones.  Life insurance is all about choices and not about rules-of-thumb.  If a family has a net worth of $20Million on paper, many financial pundits would make a blanket argument that it’s ridiculous to keep an old life insurance policy and not simply cash it in because, as the mainstream financial media says, “with $20Million, you should self insure”.  Financial media need to shift focus on what clients WANT, not what someone else says you should do. 

 

Here’s the Forbes article:

 

Many people do not view life insurance as an essential and vital part of a retirement income plan. They see life insurance primarily as a way to protect families from the early loss of a breadwinner during the working years. However, life insurance has the potential to be so much more if properly utilized in a comprehensive retirement income plan. According to Jen Sias-Lyke, State Farm® Insurance Agent, “Life insurance plays an important role in any financial plan. It helps loved ones recover from financial risks and unexpected costs, increasing their chances of reaching long-term goals and achieving dreams. Thinking about financial protection and retirement can seem overwhelming, but as your life changes so does your financial situation.” Unfortunately, many people do not fully understand nor appreciate the value and benefits that life insurance can represent as part of a retirement plan. Having the correct type of life insurance and the appropriate amount of life insurance coverage in retirement will accomplish multiple jobs. It can help protect your income, provide tax-free cash flow, help manage taxes, provide peace of mind to families, and even improve the total returns in a portfolio. Here are a few strategic ways to utilize life insurance as part of a comprehensive retirement plan:

Protect Your Income in Retirement. According to James J. Meehan, MSM, Managing Partner of 1847Financial, “Life insurance needs to be the foundation of any solid retirement plan if your family is depending upon your retirement income. You can’t invest your way out of an untimely death.” When one spouse passes away in retirement, the surviving spouse often struggles to meet their income needs. While expenses might be lower, the drop in expenses rarely offsets the drop in income. At a minimum, one of the two Social Security benefits the couple was receiving will go away. So for many couples, life insurance can be used to ensure that there is enough money to replace any lost Social Security or other retirement income. In this way, the surviving spouse is able to maintain his or her current standard of living throughout retirement.

Protect Your Income in Retirement. According to James J. Meehan, MSM, Managing Partner of 1847Financial, “Life insurance needs to be the foundation of any solid retirement plan if your family is depending upon your retirement income. You can’t invest your way out of an untimely death.” When one spouse passes away in retirement, the surviving spouse often struggles to meet their income needs. While expenses might be lower, the drop in expenses rarely offsets the drop in income. At a minimum, one of the two Social Security benefits the couple was receiving will go away. So for many couples, life insurance can be used to ensure that there is enough money to replace any lost Social Security or other retirement income. In this way, the surviving spouse is able to maintain his or her current standard of living throughout retirement.

Shutterstock Photo of life insurance and other strategies that fit into a retirement plan.

Keep Your Retirement Savings on Track. According to retirement income expert Curtis V. Cloke, CLTC, LUTCF, RICP®, “In the 10 years leading up to retirement, many couples find themselves playing catch-up on their retirement savings. During this period, if one spouse dies, the surviving spouse could end up being severely short on retirement savings.” For this reason, Curtis recommends buying a 10- to 15-year term life insurance policy on both spouses prior to retirement in order to protect the retirement savings plan. Cloke notes that the premiums for this term policy could be very inexpensive, so it will not place a huge financial burden on the couple. However, he also notes that you might want to get a policy that can be converted into a permanent policy in case a future life insurance need arises. A convertible term life insurance policy will help protect your insurability in case health changes.

Improve Your Investment Asset Allocation and Returns. With interest rates close to historical lows, bonds and CDs are not an attractive investment for many retirees today. However, most people still need some safe investments and assets in their retirement income portfolio. Tom Hegna, CLU®, ChFC®, CASL®, a professional retirement planning speaker, author, and host of the popular PBS TV special “Don’t Worry, Retire Happy!”, suggests positioning life insurance as a substitute for bonds in a retirement income portfolio. “Right now bonds have very little upside. They are only paying in the 1 to 3 percent range. Yet the risk of holding bonds is very high. If interest rates rise, the downside risk to bonds could be 20-30 percent or more.” Hegna recommends that “retirees should consider a whole life policy as a bond substitute for some or all of their bond portfolios. The life insurance policy can provide bond-like returns of 3 to 5 percent without the interest rate risk of a bond.”

Shutterstock – Taxes can play a big part of retirement planning but life insurance can help.

Manage Your Taxes. Russ DeLibero, CFP®, ChFC®, CLU®, who also holds a PhD in Financial and Retirement Planning, notes that there are tremendous uses of life insurance in a retirement income plan because of the preferential tax treatment that life insurance receives. According to Dr. DeLibero, “When properly structured, life insurance can provide tax-deferred growth, tax-free cash flow, and a tax-free death benefit. The tax-preferential treatment provided to life insurance allows an individual to have greater flexibility over which dollars to use during retirement, and depending on the type of life insurance, it can also provide a non-correlated asset to the portfolio providing additional diversification.” With tax rates constantly changing, life insurance can also function as a hedge against future tax rate hikes. “The tax-preferential treatment of life insurance can be especially advantageous for individuals in a higher income tax bracket or as a hedge against a rising tax environment. As taxation rises, tax-free cash flow becomes more advantageous.” Tapping into cash value income tax free can be a great way to supplement a retirement income plan and, at the same time, help manage taxes.

Make sure to investigate the ways life insurance could fit into your retirement plan. Not everyone’s needs are the same. Some might benefit from term life insurance while others might benefit more from permanent life insurance. Still others might not have a significant need for additional insurance. There are those who already have insurance who may be underinsured and are leaving much risk on the table by not having the proper amount or type of life insurance. For those considering getting life insurance, sooner is better than later. Unfortunately, many people ignore the need for life insurance until some mortality event suddenly occurs. Jen Sias-Lyke states that, “Key life events such as marriage, moving or buying a home, having a child, changing jobs, and retiring could signal the need for changes to a financial plan. Life insurance should be an important piece of that conversation.” Take the challenge seriously, because having the right plan and the appropriate life insurance policy can improve your retirement. Start the process today by doing your due diligence. Determine your specific life insurance needs, get referrals for a quality life insurance specialist, and review the companies offering life insurance policies before you purchase. Remember, life insurance can provide more than just protection during the working years. It can continue to provide protection and benefits throughout retirement.