THE BEST LIFE INSURANCE POLICY
If you could pay term premiums but have whole life coverage would that be the perfect plan?
The question to ask: What is The Best Life Insurance for me personally at this specific time? Most have heard of Term Life, Whole Life and Universal Life (UL). However, there are a number of other variations that one could consider. In addition, there are Variable UL, Indexed UL, Interest Sensitive Whole Life, Non-Par Whole Life, Participating Whole Life and other Hybrid Designs that use a combination of term and permanent. How do you know which is the best for you?
It is best to evaluate in light of your current situation. It can be overwhelming to try to comprehend the myriad of life insurance policies available on the market. A qualified agent / advisor can be of tremendous help as you wade through all of the many choices. In short, spend time educating yourself and evaluating your short term and long term needs. Make certain you know what the guarantees truly are.
For the purpose of this document we offer the following for consideration:
To choose a policy, decide on your needs both long term and short term. Are you simply needing to transfer risk so that income is replaced and there is cash on hand to fill the hole that is left if you die? How much do you need? How much do you need over what period of time? Do you want coverage that you can purchase on a guaranteed basis and KNOW that you are buying a death benefit that will pay off if you are age 95 or 105? Do you need extra money saved in addition to the death benefit?
Guaranteed UL or “Term to 100” Life insurance can certainly guarantee that a tax free death benefit is paid regardless of whether your circumstances change. It also cuts down the premium of a typical Whole Life policy because it doesn’t put any money into forced savings.
Are you wanting to leave a legacy? Relative to the premium paid and the death benefit that will ultimately be realized, a Guaranteed UL Policy has an IRR which shows that it is a good swap of dollars, especially considering that life insurance proceeds are paid income tax-free.
For determining how much coverage you need, the web address www.lifehappens.org/life-insurance-needs-calculator has an easy to use, needs-analysis calculator. However, you will want to keep in mind that the calculator will not address the “want” or the “attractiveness” of the product. Today, one can make the case that Term Life Insurance is sold in many respects as a commodity. If you can buy a guaranteed premium and death benefit on a no cash value, permanent plan, you can essentially say these plans are commoditized as well. With a pre-determined, guaranteed premium, the only variable is how long you live. Guaranteed UL, by design leaves a legacy. The IRR will be dependent on when you die, but if you live to 95 or 105, the death proceeds will have have been considered a good return in relation to the premium paid.
The fact that the Premium and Death Benefit are Guaranteed is what makes GUL so strong. For newer, Guaranteed UL plans, the death benefit is guaranteed to be there regardless of changes in the cost of insurance. This could be the greatest opportunity to make a difference in the lives of your family for generations to come. Now you can buy a death benefit, know that it is guaranteed to be there no matter how long you live and have the confidence you have never had a better swap of dollars.
There are still agents / advisors that are not knowledgeable about GUL. Some advisors may not be presenting the product because they don’t realize how attractive it is to consumers. Perhaps one looks at this and says, “this is too good to be true.” Don’t shy away from Permanent Life due to the belief that all Permanent Life insurance is as expensive as Whole Life. In fact, this product falls right between Term and Whole Life in premium. You have the best of both in low cost, yet permanent, protection. Remember, know the Guarantees!