Baby and a House! Term or Perm Insurance?

I did both

Now I need to line up the right insurance to protect all of the above!!

I talk about these two types of insurance all-day- every-day.  In fact, I have incorporated the importance of insurance products into almost every conversation I have had with Reps, friends, family, webinars, presentations, etc., for last 15 years or so, maybe even longer.  I love it! 

I am in a position where I have to buy more insurance.  It’s time to decide whether I am going to buy term insurance, permanent insurance, or some of both.  This should be similar to the conversations and thought process you should be taking your clients down.  In July we will be closing on our new home and early fall we will be having our second child, a lot of positive changes.  With the dynamic of the family shifting, so must our financial planning and protection.  However, I am finding it very ironic that I am having a tough time deciding as a consumer, which route to go. So, allow me to think through my options. 

Term Insurance Pro’s

1.      Cover a specific time period for my mortgage

2.      Replace my salary to protect my family in the event that something happens to me

3.      Guaranteed premiums for term duration

4.      Cost savings (cheaper than permanent insurance)

Term Insurance Considerations

1.      Temporary solution to perhaps a lifetime need

2.      Term has a shelf life- will need to reapply for insurance after term is done, risk losing best underwriting offer

3.      Carriers have limited conversion options; some do not offer them at all leaving the term option less appealing

Permanent Insurance Pro’s

1.      COI’s cheapest at my current age; I am the youngest/healthiest I will ever be today

2.      Guaranteed to age 100/120

3.      Could use for tax free dollars down the road

4.      Could use to leverage for rising healthcare costs

5.      Possible college savings vehicle

Permanent Insurance Considerations

1.      Less budget friendly than term

2.      Possibly need less the older I get

3.      Products evolve, being locked into a product that is outdated

4.      Depending on the permanent product, risk of COI’s rising or returns not being there

Conclusion:

All in all, the tax free benefits (regardless of which way I decide) to my family is a value I cannot put in words.  Being able to ensure they would have financial security if something were to happen to me is something I cannot put a premium on either.  My recommendation to myself:

1.      Term/perm combination in this situation is a very high probability

2.      Ensure the term insurance has great conversions & riders for flexibility down the road

3.      Structure the permanent to guarantee to age 100

4.      Possible cash value chassis for flexibility as my family needs change

For more information on our Life Insurance Platform and having these conversations with your clients please call 800-699-0299 and ask for one of our Life Experts!