SEPTEMBER IS LIFE INSURANCE AWARENESS MONTH
Thought for the day:
Ever notice that people never say “It’s only a game” when they’re winning? -Ivern Ball (I don’t know who he is either)
If you will read no further:
We have been seeing a significant increase in term insurance sales lately. That is either because of our incredible marketing and the knowledge and experience of our life experts Randy Masciarelli and Nancy Woo; or there is an increased concern about creating a financial hardship in addition to the personal devastation cause by an untimely death. BTW, I wonder just when there is a “timely death”
This is a good place to point out the difference between a Financial Advisor and an Insurance sales person. An insurance sales person is the one on the other end of the line (or the email) when you call for a term policy. He/she makes sure you get the least expensive or the easiest to qualify for. (period)
The Financial Advisor takes into consideration the ultimate need and the best way to insure within the context of the rest of the clients’ financial portfolio. We help you do that. Just contact the aforementioned experts at (800)238-8144.
Thought for the week:
Term vs perm
The cost of term insurance and permanent insurance is basically the same. Term insurance covers pure mortality risk that is paid for out of after-tax earnings from your work or from “the invested difference”. Permanent insurance is the combination of pure mortality plus the “invested difference” (the cash value) used to fund its cost. Any true cost differential between the two is not for the insurance, but for the guarantees involved. The best way to purchase insurance is to move (or create) cash savings into a cash value account and purchase as much pure insurance as is practical at pure mortality cost using the tax free interest generated by the cash (Permanent Insurance). Then purchase the remainder using term insurance understanding that it cannot be counted on to be in force later on in life when the client must surely die. The Permanent Insurance will reimburse the estate for all the money spent on all the insurance in force for his/her lifetime, and then some…tax-free.
Life Insurance is one of the few things that guarantees to perform as promised regardless of what unknowns occur and when. We don’t know what the economy is going to do or when it will do it and how it will affect us. Pure term insurance provides modest (if any) guarantees past the term period. The term portion of whole life or universal life (permanent insurance) is guaranteed to be available until death, even if that is not until over age 100.
To try to determine which is the most cost efficient is an exercise if futility until after the individual has died. And then it doesn’t much matter. If the insured dies soon, does anyone really care if he paid 5 years of whole life premiums or five term premiums? If so, they need to get a life. And if the client doesn’t die during the 20 year term period but is terminally ill at that point with only a couple years left, in retrospect would he prefer to have purchased a permanent policy? My experience tells me… ALWAYS!
Life insurance should be acquired based on how much of life’s risk you would like to lay off on the insurance company and what you are able to pay for the service. But one thing is for sure. Forty years of watching clients has taught me that “self-insurance” is only a great idea until it’s time to write the checks. Then they scramble to find an insurance company to step up; and are truly disappointed when none will.
PS: Annuity sales are continuing their steady increase as more and more of you are learning to make your recommendation in the context of providing the client with dependable predictable cash flow while helping them increase their legacy. This is going to be especially important as we continue forward into a period of greater uncertainty and low stock market gains. Send us a note if you would like to have Josh VerHoeve or Tim Morton call you and explain further how to demonstrate this to the client.