The array of life insurance products available to the consumer today can be overwhelming.
You may have come across terms such as term life, return of premium term life, decreasing term life, universal life, indexed universal life, variable universal life, whole life, endowment whole life, etc.
What are all these various life insurance products?
In general, there are two broad types of life insurance products:
These policies include the various forms of universal life and whole life policies. The goal is to design a policy that will be inforce with a death benefit paid when you die, no matter when that occurs.
I have heard people say you should only buy term life insurance and invest the difference. That may not be the best strategy for each individual, and rarely does an individual insured follow through on the second half of this strategy.
Conversely, I have had people tell me they should only buy whole life insurance. Again, this is not necessarily true and it depends on the objectives and goals of each insurance buyer.
In most cases, when we recommend life insurance, we end up using a combination of term and permanent insurance. Each person is different in their planning needs and this is what drives the direction to take for your life insurance needs.
The ownership of a life insurance policy is not some random item to overlook. Due to the many variables that impact the ownership of a life insurance policy, this decision often involves not only the insurance agent, but your CPA and estate planning attorney.
Ownership designations are driven by how benefits could be paid in the future and the potential tax implications.
Correspondingly, all too often people do not properly designate beneficiaries at initial purchase of a life insurance policy, but also do not keep beneficiaries up to date based on changing personal, financial, and business circumstances.
Life insurance policies are not a buy it and forget it product.
As fiduciary advisors, we are unlike those who are only licensed to sell insurance, or those who may be influenced by a large commission, or pressured by their primary insurance company to sell you products that may not be in your best interest.
If and when we make an insurance recommendation, it is because we believe it is the correct product to meet your financial goals and objectives.
Likewise, if we do an analysis of your current life insurance policy and it is best to keep that policy, we will tell you so and not convince you to buy a new policy just so we earn a commission.