I've already discussed term life insurance and the benefits of it. Term is my favorite type and almost every financial advisor would recommend having some. Now I want to spend some time on permanent life insurance. This is one policy that some financial advisors will tell you stay away from, but they also deal with people that have a lot of money and might not need life insurance past retirement. Most of us don’t fit in that category these days. In this blog I’ll tell you why I like it and who can benefit from having it and you can make the choice of whether or not it’s right for you.
Life insurance on children
I am all for a permanent policy on children. First, by getting a policy on a child at a young age you are guaranteeing that they have life insurance and at the most affordable rates they will ever have in their lifetime. Life insurance rates take into account 2 main things: your age and your health. You will most likely never be healthier in your lifetime than you are as a child and healthy people get lower rates. You will always be younger today than you will be tomorrow and the younger you are the lower your rates. So why not lock in a low rate for your child and guarantee they have life insurance?
The second reason I am for life insurance on children is one I pray no one has to deal with, but unfortunately accidents happen way more than we want to believe. Just turn on the news and you will hear of a car accident that took the life of a child. If there was an accident and my son passed away there a couple things that will happen. First, I would fall apart. By falling apart I will not be able to work for a lengthy amount time which will affect my income. Life insurance will make sure that income is replaced. Second, I will have to come up with money to bury my child. Most of us don’t have that kind of money sitting in the bank so we set up a go fund me account or have a benefit dinner to pay the bills and even then it’s usually not enough.
I know, when you think of a child passing, the last thing you think about is money. Unfortunately you will not be able to hide from the financial stress.
Permanent Life insurance on yourself
I hope everyone has a wonderful life and lives well into their 90’s. My grandmother almost made it. She was right around 87 when she passed several years ago. She had a great life and made a huge impact on the lives of many people. Ask anyone that spent any time around her and they will instantly begin smiling at the thought of her. She had a permanent life insurance policy and we are grateful she did.
Her only source of income was a small pension for a couple hundred dollars a month and social security that wasn’t much more. She lived in a small apartment and only had what she needed so there were no assets, but she had a small life insurance policy. It was only large enough to pay for her funeral, but that’s all that was needed. Had she not had that policy, my aunts, uncles and mom would had to of figured out where to get the money to throw that final celebration of my grandmother’s life.
Looking at statistics today, many people will retire without a retirement account to speak of and will be living off social security as my grandmother did. That means there will be no money for your children to throw the end of life celebration in your honor that you deserve unless you either have life insurance or rely on the charity of friends and family.
Your family will be responsible for throwing that celebration in honor of your life. Don’t make them stress about where they are going to get the money to do it. Some people even have to take out loans for it. The last thing I want is for my son to take out a loan from a bank to bury me. If you have a good savings account or a lot assets, a permanent policy may not be right for you. But for the majority it can be worth it.
Now some will say “I’m 32 years old and plan on having a good retirement account when I’m old” That’s great, can you guarantee it though? Let’s get you a term policy and a small permanent policy anyway. If you get it now it will cost less than it ever will in your life because of the age and health factor. And guess what, if you retire and you do have that great nest egg built up then you can cancel that permanent policy and by doing so you will get the cash value it has built up all these years. So it’s a win win. If you need it’s there, if you don’t you get money back!
I hope people read this and it helps them make smart decisions and remember, life insurance is not for you, it’s for your family. Make sure they are financially protected if you are no longer here to help them.