Most of us leave managing the risk associated with our financial portfolio to a professional. You may be familiar with their suggestions to diversify by making investments, but did you know that life insurance is an important addition to your overall financial plan?
Often we think that there are only two choices when it comes to life insurance - term or permanent. Purchasing life insurance, however, should not be simplified to only two choices. You may be better off asking yourself a series of questions designed to help you find the right policy for your needs. How much insurance do you need and how long do you need it? How do you anticipate your insurance needs changing in the future? How much can you afford to pay in premiums over time?
With a permanent life insurance policy in force at the time of your death, a death benefit is paid to your beneficiaries. Some permanent policies provide level premiums and most policies offer a cash value component. With a term policy, a death benefit is paid to your beneficiaries only if you die within a specified period of time. The premiums are subject to increase each time you renew your policy and there is no cash-value. Term policies are attractive because the premiums are initially lower than a permanent policy, but if the policy is kept for a long period of time, you may end up paying more in premiums than with a permanent policy.
You might read the differences between term and permanent policies and think, Iíll get a term policy and invest the premium difference. Many of us do not have the discipline to set aside that extra money each month if we are not already bound to do so by a premium. Honestly consider your ability to set aside money, along with the financial goals you are attempting to achieve, before ruling out the idea of a permanent life insurance policy.
A good financial representative will make sure you are educated about the option of adding life insurance to your portfolio. Life insurance is a sound, conservative addition to financial plans and should be closely examined. Your financial representative should ask questions about your needs and goals, analyze the reality of achieving those goals, create a plan, and make sound recommendations about products that best meet your needs. In addition, your representative will be available to provide service on your policies and will be a valuable resource for your future financial needs.