What is the Best Life Insurance Policy for You?

A couple recent articles reveal that, distressingly there are still arrogant, narrow-minded people who pass judgement on others conceiving that they really do know what’s best for others regardless of whether they even know what’s best for themselves. This primes such self-appointed experts to push their ideas, products and services which don’t definitively benefit or meet the needs of the those they set themselves up to serve.

The first article is about a couple in Oregon who had their children taken away from them at birth.

  • The Oregon Department of Human Service removed children from the home of a young couple because the parents’ IQ wasn’t high enough, even though there were no signs and no reports of abuse.[i]

Interestingly, the courts ruled against Oregon DHS in this case and returned the children to the parents’ home.  But not after a long and protruded court battle that left permanent emotional, mental and financial damages on the parents and children alike.

This unhappy story emulates what some “experts” do when they lean on prospects and clients alike telling them to just “trust me”. Why not take the time to educate and inform? People aren’t stupid!  And once educated they can make intelligent choices that they deem best.  Of course, they need to have the right knowledge basis to make such choices.  And insulting people’s intelligence is no way to build that knowledge base.

Or take this story that appeared in the news this past week.

  • The publicly-funded Canadian Broadcasting Corp. (CBCD), published an opinion piece arguing that Canadians who have big families should be publically shamed, and that the country should be importing more migrants instead. [ii]

Distressingly, much like this CBC commentator, some financial planners and life insurance agents, have no cognizance about what they are really selling. In fact, they end up destroying the very premise on which they stand when they sell products that don’t fit or meet their client’s needs or expectations. This inevitably destroys their own trustworthiness, the very thing that a financial planner and life insurance agent needs most if they are to earn the respect needed to educate the public about the products and services they provide.  Obviously, in the case of the CBC commentator, she destroyed her own credibility by exchanging Canadian born children for immigrant children, which would increase, not decrease, the number of big families if her premise where actually adopted.

Going back to the Oregon DHS case. This is like some financial planners and life insurance agents who believe that one size fits all.  It makes no difference to them if you are self-employed, salaried, retired, own your own home, own your own business, have a mortgage, dependent children, none or all of the above.  They insist that you should only and always buy a certain type of life insurance.  It might be term.  It might be Universal Life or Indexed Universal Life.  It doesn’t matter what you need, it matters what will make them the most money or what product the insurance company is providing with the greatest bonus on at the time.  And so, when you feel pressure to purchase any kind of life insurance you should step back and ask the question, what best fits your needs?  What will benefit you the most? And once you’ve been educated enough to answer those questions you will know what insurance policy is best for you.

Years ago, I was attempting to help a beneficiary of some life insurance policies to locate the company that now held the contract on the policies which the owner had left behind.  Contacting the Insurance Commissioner’s office, I listed off the multiple policies and the Insurance Company that was on the contract but who was no longer the company that managed the policy.  The clerk at the Commissioner’s office was shocked that anybody would own more than one life insurance policy. And like the CBC commentary, expressed her ignorance by passing a slanderous opinion of anybody that would own so many life insurance policies.

But here are the facts.  When we are younger we tend not to earn as much money and yet that is the time in life we typically have our children, start a mortgage, attain our education and begin incurring liabilities. This is also a time when money is often tight.  Though the probability of actually dying is lower when we are younger, there is still the possibility that we could die leaving our family without our income to support and carry them through the period of time it takes to financially get back on their feet again.  This is why term insurance is so important.

  • Term insurance is very affordable when you are younger and therefore it is a fantastic way to cover your higher liabilities at that time in life.

That is why we advocate young families should be purchasing the highest term policy that is affordable and comfortable for them as insurance will never be less expensive for them than at this time in life.  Nobody wants to leave their family financially strapped should they die before they reach a ripe old age.  And there are too many things that we provide for our families that simply wouldn’t be affordable if we weren’t there to provide for them.

But Term is merely for a period of time and the cost of that term insurance will become unaffordable as you get older.  Therefore, term insurance will never protect you for your entire life because it doesn’t build any equity.

  • Participating Whole Life Insurance is life insurance that guarantees a level premium for your entire lifetime
  • And it builds equity

In fact, the equity that Participating Whole Life builds can outpace the cost of the insurance itself in a matter of a few short years, typically between 8 and 10, depending on your age, health and risk factors.  And unlike term insurance, where the premiums paid can never be recovered unless you die, once the Participating Whole Life policy has more equity than cost basis, your insurance has really not cost you anything, and will continue to cost you nothing to maintain.

Yet, there are some agents, financial planners and even television and radio personalities who despise Participating Whole Life insurance as much as the commentator on CBC despises Canadian born children.  Not for any logical reasons, mind you, but simply because they don’t make enough money selling it or they don’t understand how it works.

So, which kind of life insurance is best for you?  The life insurance that meets your needs!  It is as simple as that.  Most commonly, term insurance is a good place to begin but waiting too late to purchase Participating Whole Life insurance will reduce your ability to build large amounts of equity.  But without understanding the true costs of different products there is no magic formula for anybody to tell you what policy or policies you need to own.  And that is why we spend so much time on education here at Life Benefits.  We know that each policy sold must meet the needs and expectations of our clients, but too frequently prospective buyers simply don’t understand what is available, or what to expect.

The most important take home message here is “Don’t be shamed or scammed by someone who has a one size fits all product.”  Ask questions and make your own mind up as to what is best for you.  Run, don’t walk away from anyone who believes you are too stupid to understand what you really need or want to accomplish with your life insurance.  And never purchase from anyone who tells you just to “trust me.”

At the same time don’t be pigeonholed into believing that you have to purchase all the life insurance you’ll ever need today.  If you do then the premium might be so high it becomes unaffordable or uncomfortable for you.  Life insurance can be added as your life continues on.  And there are certain ways to guarantee that you will always be able to purchase the best life insurance you need if you start today when you are healthy, young enough and have the income to purchase life insurance.

Life insurance is a great financial tool that can be used in many beneficial ways even while you are living, permitting you to keep and manage more of the money you make.  If you would like to learn more so you can make an educated choice about what life insurance policy is best for you, contact our office at 702-660-7000.

[i] NYdailynews
[ii] Reddit