12 June 2014 0 Comments

No B.S.! Just tell me what insurance policy is best

shutterstock_146949359More than once I’ve heard a version of this demand:  Don’t sell me; just tell me in simple language what type of life insurance is the best to buy!  Okay, I hear your frustration.  I’ll try to comply, though without some information on your personal needs and objectives, that’s going to be tough.

But, if you won’t tell me anything about what you want to accomplish and what your current and anticipated financial picture looks like, the answer is: 10 year Term.  That’s because the premium will be very low allowing you to provide maximum protection at lowest current cost and if, after a while, you feel a different amount of insurance or type of policy is needed, you haven’t paid extra for the benefit of a lifetime guarantee that you may or may not ultimately need.  Be sure the term is convertible so you can continue protection beyond the 10 years if you have some health problems during that time.

If you are at the beginning stages of raising young children and you can afford a little more premium, then opt for 20 year term.  That will lock in a low, level premium for the duration of your family’s growing-up years.  But, 20 year term will be more costly than 10 year term—especially  at advanced ages—so if you think your needs might change in that 20 year window,  go for the less costly 10 year term.  If you are at the start of your family raising responsibilities, and can only afford minimum premiums, don’t skimp on the amount of insurance you buy; reduce the duration of the term to keep the premium affordable.

Once you get much past age 55 and you know you want your insurance to continue forever, then my recommendation is a Lifetime Guaranteed Universal Life policy.  It won’t build much cash value, but it will give you the lowest premium outlay for permanent insurance.  But, don’t buy this type of policy until you can really plan to keep the premium payment going for life.

Well…I probably reneged on my promise of simplicity. But what can you expect from a life insurance agent?

Coming up…some misconceptions about life insurance.

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