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Life Insurance for Life


If you knew when you were going to die, figuring out what to buy for your life insurance needs would be much easier!  For myself, I didn’t get any life insurance until I bought the house I grew up in at age 35.  I bought a 20 year level term policy for the amount of my home loan, because that was really my need at the time.  If something happened to me, I didn’t want my family to have to deal with my monthly mortgage bill while they were figuring out what to do with our family home.

Fast forward 20 years and surprise! – I still have a mortgage on my house!  I’ve re-financed twice now – once when I needed a new furnace and once again when I needed a new roof.  Luckily my life policy had a guaranteed renewal option without any new medical tests required.  My cost did triple for being 20 years older – but it was triple the rate set at my health when I was 35.  (in other words – I was able to keep the policy and it is still affordable)

Not everyone is as fortunate.  Every few weeks I have someone contacting me because a policy they took out years ago is now up and they are facing either much higher costs due to being older, or they may not even be able to get a policy.  There can be many reasons such as poor health or simply being too old.

If only we knew when we were going to die!  But we don’t know.  We don’t know in our 20’s what we have ahead of us.  We don’t know what debts we may take on or whether we’ll marry and have children that depend on us financially.  We don’t know if we’ll develop a health condition that may prevent us from being able to buy life insurance later when we get a home – get married – have kids in our 30’s or 40’s.  It’s not possible to foresee what would be the right type and amount of insurance – I wish it were so – but I think the best you can do is have something when you die and hope it’s enough.

There is a product that might be a real decent choice given the uncertainty everyone faces when it comes to deciding on life insurance.  It’s a term policy with a return of premium rider.  Basically, it offers term rates with a refund at the end of the policy for what you paid if the death benefit isn’t collected.  It is more expensive than a regular term policy where there is no cash value to it – you only get paid if you die and if you don’t die – they keep all the money.

The term policy with the return of premium rider isn’t too bad though if you buy it when you are young and healthy – when rates are lowest.  It also has a provision where you can elect to have paid up life insurance at the end that will cover you for a smaller death benefit up to age 99.  (this is instead of taking the refund for what you had paid)  This is great when you retire and are faced with a limited income and still have a need for life insurance.  This policy won’t cost you any more payments and can cover your funeral costs and possibly even some money to leave family or your favorite charities.

There is also an accelerated benefit rider that allows you to use part of your death benefit if you are terminally ill and need that money for perhaps hospice care or other end of life expenses.

I decided to write this quick blog post today to share just a couple thoughts about life insurance and how important it is to think about it before you are faced with limited choices.  If you aren’t sure what to do – give me a call – I will be happy to talk you through the options we have available and give you rates for consideration.  No pressure – and at the very least you’ll have some helpful information to plan for your future!

I did have a friend that was an insurance agent for a big Life Insurance company back when I was in my 20’s.  He talked with me about some options and I really wish I had listened to him and taken out the policy he had recommended at the time.  The life policy I eventually got when I bought my family home has worked out “ok” for me, but my plan is only a death benefit.  It would have been nice to have been paying a lower rate for something that had some cash value later … to help supplement my 401K savings.  Sort of a “forced” savings plan via life insurance.  It’s not that it should replace other retirement planning, but it is an option everyone should at the very least consider.  A permanent life insurance plan.  (my 2 cents – for what it’s worth.

-Jenny Brower, Harbor/Brenn Insurance Agencies