The Golden Rule of Life Insurance
The Golden Rule of Life Insurance
As a financial planner, there is no subject I consider more important than life insurance. I tell the new advisors in my office that the first time they have to deliver a life insurance check, it will completely change their perspective on the subject.
In my practice, I often scratch my head at some of the things people insure first. Many purchase insurance coverage for their cellphones, travel insurance or zero-deductible glass coverage for their cars, yet neglect to insure the financial engine that sustains their lifestyles. Why is that?
The financial security life insurance provides to families and businesses is well known. Less obvious are some of its additional potential benefits, such as helping cover nursing home care, tax-deferred cash value growth, portfolio diversification, policy loans and tax-advantaged income streams.
As you begin your research, you will quickly discover that there are many types of life insurance because there are many different needs. The most important consideration is getting the amount of coverage right. Why? If something happens to you, your family or business partners won't care what type of policy you had. They will care whether the benefit was sufficient to protect them.
Additionally, some life insurance policies allow you to adjust your coverage as your needs change. Once you determine the amount of coverage you need, you can focus on the type of policy that best fits your situation.
You will encounter terms such as term insurance, whole life, dividend-paying whole life, universal life, indexed universal life and variable life. Ultimately, life insurance falls into two broad categories: temporary and permanent. Term insurance provides coverage for a specified period, such as 10, 15, 20 or 30 years. Permanent insurance is designed to provide coverage throughout your lifetime.
Which type is best? The answer is simple: the one that fits your needs.
So, the golden rule of life insurance is to get the amount right first, then choose the type of policy that works for you. As with any important financial decision, do your homework and work with an advisor you trust!
Need help? Give us a call!
Disclaimer: Crosby Advisory Group, LLC is a registered investment advisor. This newsletter is for general knowledge and is not intended to be individual investment advice. Investing involves risk including potential for loss. Understand all risk and fees before investing. NMD Insurance is affiliated with Crosby Advisory Group, LLC.
