We Don’t Talk About This Much
This is a topic we don’t bring up very often because it’s not the main focus of our business. Our primary business is helping people find the best Auto, Home or Small Business Insurance that fits their needs. BUT we will help our client’s if they have a need for Life Insurance. I say “need” because I don’t think everyone has to have Life Insurance. I believe that you will hopefully outgrow your need for Life Insurance. As you increase your savings, pay down debt and your children become financially independent, you should no longer have a need for Life Insurance, unless you have special estate planning needs, which the vast majority of people will not have.
Since I believe that you will outgrow your need for Life Insurance, I’m a big fan of Level Term Life Insurance. Level Term Insurance just means that you will pay the same premium over the selected term ranging from 10 to 40 years with a fixed benefit amount, and at the end of the term you have the option to renew or let the policy expire. Level Term Life Insurance is the most affordable way to purchase the highest benefit amount with a fixed premium.
The other option is to purchase Permanent Life Insurance, which is more expensive, meaning you would probably have to purchase a lower benefit amount to fit your budget. But as the name suggests, this policy will be with you forever, as long as you follow their requirements, like continuing to pay the premium. These policies are more expensive because they know that they will have to pay out.
My recommendation to people who are considering Permanent Life Insurance, is to instead purchase a Level Term Insurance Policy to get the highest benefit amount when they need it the most and then open an investment account to invest the remaining amount they were going to spend towards the Permanent Life Policy. I know this route takes more discipline, but it is worth it. With auto deduction options, it makes the discipline required much easier. This setup will allow you to get the highest benefit amount AND build your savings. When my family is young, I’d rather have a $1,000,000 Term benefit vs a $100,000 Permanent benefit.
If you are a client of ours and would like help with you Life Insurance don’t hesitate to reach out. And if you are adamant that you want a Permanent Life Insurance Policy, we have partners that we can refer you to that specialize in that type of insurance.