Life insurance is often confusing for most individuals. Insurance agents normally work for just one company and the company tells them what products to sell. This doesn’t really give the individual the best value for their money The number one issue – they tell you what you’re going to buy and they often forget to ask you what you want and why are you buying it.
Example: I’m a grandfather and I want to cover my final expenses (burial), but I have grandchildren I want to leave money to them forever, a term policy will not work because their rate increases as I get older and I won’t be able to afford it. Term insurance is always cheaper, so it sounds better, but it does not always meet the need. As a matter of fact, you could be throwing money away because it becomes not affordable and is not available to the grandchildren which was the most important desire.
YOU NEED THE RIGHT PRODUCT THAT MEETS YOUR NEED, NOT JUST THE RIGHT PRICE.
Pricing is important, but in the end if cheaper becomes unaffordable
and does not do what it was supposed to do..
the money you spent is gone and you have nothing to show for it.
Rick Power, our financial and insurance adviser, does not work for any insurance company and does not represent or sell Life insurance for just one company. Also, our main focus is to ASK, UNDERSTAND, and PROVIDE OPTIONS that meet YOUR NEEDS and YOUR POCKETBOOK. He is the expert in this area. YOU MAY CALL HIM DIRECT 469-223-5553, email him at firstname.lastname@example.org or call our office 972-263-0043 to set up and appointment to discuss your needs and desires. If you have already purchased life insurance and want to make sure you understand what benefits you have, he will also assist you with this evaluation.
So let’s look at the 3 types of insurance – remember the number one reason you buy life insurance is tax free benefits to your heirs.
WHOLE LIFE – covers you from the cradle to grave, fixed monthly premium and will last your entire lifetime. Has ability to build cash value to cover future premiums, meaning it can be paid up by age 65 or sooner. This would have been the better solution for the Example of the Grandfather listed above because it would be paid up by my age of 65 or sooner and therefore the grandchildren would receive the benefits. These policies are the Cadillac plan of life insurance plans.
TERM LIFE – this is the cheapest way to go. This is what is offered to Postal and Federal employees, see FEGLI insurance. You may want to purchase a 30 year level term policy at a very low rate if you have a 30 year mortgage. Once the house is paid off, DROP THE COVERAGE. It is designed to provide insurance benefits while debts are higher and you are raising a young family. Sometimes cheaper is not better. Have you ever heard “buy term and invest the difference?” In a perfect world, you could buy term when you are very young and if you invest the difference that you are not paying for a Whole Life policy, you’re going to get rich. Assuming your invested amount is guaranteed not to lose money for 30 years. But regardless of even that, in the 30 years that Rick Power and Gary Graham have been doing business, not a single person has invested the difference. Something always comes up, emergencies, bills, children going to college. Many people have told us that they feel “betrayed” after 30 years of payments and now they can’t afford the term policy any longer. Term Life has a purpose and every family should consider it as an option, however, do not look to this as your only Life insurance benefit.
UNIVERSAL LIFE – this plan is extremely confusing to even insurance agents that sell it. It is designed to look like Whole Life, but truly it is a Term Life in nature. It has outrageous fees monthly. The rates go up every month while you own the policy. Meaning sometimes agents sell this as a permanent Whole Life plan saying that the cash values will pay all future rate increases and your not have any worries. We have seen clients paying $40.00 per month and they have built up $10,000.00 in cash value, however, as they age the rates go up. At age 65 to 70 they keep paying the same monthly premium, however, the rates have gone up. They don’t receive a letter from their agent of the insurance company…so the higher rates/premiums start eating away the cash value. Down the road they get a huge bill stating that NOW they must pay $500.00 a month and every year there will be a higher rate. If you currently own one of these plans, make sure you have a no lapse guarantee. This is an extremely dangerous plan if it is not understood.
BEWARE!!! ALL INSURANCE COMPANIES ARE NOT OFFERING THE SAME OPTIONS AND RIDERS
EVEN THOUGH THEY CALL THE NAME OF THEIR PRODUCT ONE OF THE 3 LISTED ABOVE
INFORMATION YOU SHOULD THINK ABOUT WHEN YOU THINK ABOUT LIFE INSURANCE
Legacy building life insurance is a personal issue. If you are focused on leaving the insurance benefit to your family members or church – then you will want to make sure your savings account continues to grow so that you do not take loans from your life insurance cash value.
If you want to make sure your family is not burdened with the expense of your burial, make sure that the life insurance you purchase does not start reducing the amount of the death benefit as you age. Average cost of funeral, cemetery and gravestone at today’s prices is $10,000.
If you want to leave your heirs tax-free money instead of the government getting part of your estate, then you would want to look at life insurance and annuity plans.
If your desire is to use your life insurance to grow in cash value giving you the option to borrow this money throughout your lifetime then you would want to make sure your policy has riders and options that will allow this to occur.
Life insurance plans have options/riders that may also be a part and purchased. Waiver of premium, disability riders, critical illness riders, long term care riders, etc.
Call our office 972-263-0043 today and begin the process of reviewing
your life insurance plan options for your needs today and for your future desire..