Is life insurance essential?
If you’ve ever asked yourself this question, you’ll want to pay close attention to this article. Later, when you think about what you’ve read or watched, be sure to write down your questions or concerns and send them to me. Contact information is at the end of this article and elsewhere on the website.
by Brian Swerdlow
While asset growth in retirement is important, protecting your money is absolutely critical. Once you’ve stopped getting a paycheck, losing even a little cash can derail your retirement plans and cause you stress and anxiety. The good news is that there are certain types of financial products, including annuities and life insurance, that can provide levels of reasonable growth along with asset protection.
No respect at all?
As people start thinking about retirement planning, they tend to avoid talking about life insurance. Often, that’s because they associate life insurance with death and don’t know or understand the other benefits this product can give you. Or, maybe they’ve had a run-in with an insurance salesman who reminded them of Ned Ryerson in the movie Ground Hog Day.
In my opinion, though, you are missing out if you only consider life insurance’s death benefits or believe only older people need it. No other product can provide the same degree of financial peace as life insurance.
If your current advisor has failed to discuss life insurance with you, consider finding another one who does. You could also add an insurance expert to your retirement planning team.
You’ll notice I didn’t say to find an insurance salesperson. You need someone who is an expert in helping people get the most out of their life insurance policies, not just someone pitching a particular company’s products.
Don’t let pushy salespeople and financial talking heads on television prevent you from at least discovering more about how life insurance helps you while you’re still alive. You don’t want to miss out on the fantastic value a well-designed life insurance policy can bring to your financial plan. There’s a reason, after all, that wealthy people love life insurance.
Life insurance serves many purposes. Strategic use of life insurance products helps shield your income and assets during your working years and into retirement. You can purchase specific kinds of life insurance contracts to supplement your savings and Social Security or help create an emergency fund.
Obviously, life insurance is also popular with people who want to create an instant legacy for their loved ones, cover their final debts and end-of-life expenses, and pay off mortgages or other loans. But, as mentioned, life insurance doesn’t just pay off when you pass away. Many types of life insurance offer so-called “living benefits.”
Permanent insurance products, such as whole life and indexed universal life, build cash value that you can use to self-finance major purchases like cars, businesses, or even homes.
Yet, in spite of all the obvious benefits, some financial experts remain dismissive of permanent life. They claim that it’s better to “buy term and invest the difference.” When someone purchases term and invests the difference, they buy less expensive term life insurance. Then, they would theoretically invest the savings.
I say “theoretically” because, in reality, few people ever actually invest the difference after they buy term. It’s one of those ideas that seems logical when you first hear it. But, as you can probably guess, people almost always spend the money they thought they saved by buying cheaper insurance. Seldom does “the difference” wind up in a brokerage account.
Another thing that happens when people purchase a term policy instead of an indexed universal life or whole life contract, is that they let their term policies lapse when the premium becomes too expensive. At that time, although they might still need some insurance, they may no longer be insurable due to age or medical issues.
As the name implies, permanent life insurance, when correctly structured by an experienced agent or advisor, provides coverage for your entire lifetime.
There’s a common misconception that only older adults need life insurance. However, even younger people can benefit from permanent life insurance policies. Whole life and universal life offer both protection and potential for cash value growth over time that anyone can use to grow wealth. I’ve had younger clients who used their permanent life insurance to pay off debt, fund college tuition, or put a down payment on their first home, all while continuing to get a steady amount of growth.
Suppose you are someone who wants to maximize asset protection and explore alternative ways to grow your money with less risk. In that case, you should find an insurance specialist who knows how to structure these policies according to your risk preferences and money goals. Your insurance expert will help you discover how to leverage life insurance to protect your wealth. They will show you how to use the money in your policy’s account to purchase growth assets and create legacies for your loved ones. A correctly designed permanent life insurance policy gives you an incredible amount of flexibility and liquidity, something many other assets cannot provide.
To sum it up, including a permanent life policy as part of your financial blueprint means more than simply having a death benefit. When you own a permanent life insurance contract, you have a versatile financial tool that will give you greater security, consistent growth, and greater peace of mind throughout your lifetime. By educating yourself on life insurance’s full potential and working with an insurance expert, you can make a more informed choice about adding permanent life insurance to your comprehensive financial plan.
