Has your life insurance protection kept up with your family’s changing needs?
Protecting your family’s financial security is an on-going process – not a once-in-a-life-time event. As we age, and our lifestyle and goals change from the original purchase date, our life insurance needs change as well. Converting term insurance to a permanent life product enables you take advantage of your youth before your age can play a larger role in your premiums. Today is an excellent time to make sure that you and/or your family are protected financially should anything unforeseen happen. Contact a knowledge broker today about permanent versus term life insurance.
Many people buy term life insurance when they are young, because it is the most affordable way to protect a growing family from year to year. Term insurance offers basic death protection, locked in for a specific period of time.
Three important changes occur as we mature:
- As incomes rise, we can afford purchases above the "budget-level" – in life insurance as well as other types of goods and services. Rising income also increases tax planning needs.
- The cost of term insurance keeps rising depending on the length of its duration, because the probability of death increases with age.
- As people mature they begin to participate more in long-range financial planning, which can include assuring the continuity of their businesses or passing assets to heirs through their estates. Their need for life insurance becomes more permanent.
Permanent life insurance can work better than term to accommodate these changes. Premiums may be somewhat higher than in term life insurance but policies can build cash value, in addition to death benefit protection.
Cash value may be borrowed and might also be withdrawn for tax-advantaged retirement income or other needs. Since few people can afford to pay term insurance premiums at very old ages, permanent life insurance is the best way to make sure life insurance will remain in force for a very long time.
We can help you evaluate whether it makes sense to convert from term insurance to permanent protection. In specified term life insurance policies, you may be able to qualify for such a conversion without providing evidence of insurability. The same amount of protection you enjoyed in the term policy can continue in your new permanent policy. In addition, you may even qualify for a term conversion credit.
In selecting the best type of life insurance for your personal needs, it pays to know your options. Even if you don’t believe a term conversion makes sense now, it’s a good idea to learn how it works and keep it in mind as your income grows and your planning horizon expands.