Only buy Life Insurance from someone that calls it Life Insurance...
WRITTEN BY: Gideon Drucker, CFP® AIF® ECA
If you’ve never been approached by an insurance agent, then the subject line here might not make sense to you.
If you have, then you know EXACTLY what I’m talking about.
An insurance agent that doesn’t want you to remember that you’re buying life insurance will call it things like...
“Tax-Advantaged Savings” or,
“Be your own bank” or,
a “Rich person’s Roth IRA” or,
“Infinite Banking” or some other nonsense like that!!!
Too often these terms are MEANT to confuse people into misunderstanding what they’re buying and why.
This particularly annoys me because insurance planning is SUPER important and generally underappreciated, but it gets lost under these misleading sales practices.
So let’s start here:
As a CFP® Financial planner, I know that term life insurance & disability insurance are foundational to any financial plan.
Not having enough protection (particularly if you are married & have a family) can devastate your long term plans no matter how much saving and investing you are doing.
I can’t tell you how many new families we start working with that have $400k+ of household income annually, have kids, have 15+ years until retirement and come to us thinking their $2mm life insurance policy and their employer’s group disability plan is enough.
I also think that in the right circumstances, permanent life insurance can be an effective legacy planning strategy...
Permanent life insurance will allow you to leave money income-tax free and estate-tax free money to your children whenever you and your spouse pass away (and allow you to spend down your retirement dollars knowing that your kids will receive the insurance proceeds.)
What are the right circumstances for permanent life insurance planning?
- You are maxing out your retirement accounts,
- You saving at least 25% of your gross income annually,
- You are on the right track to retirement such that you can afford to start thinking about legacy planning & estate maximizing.
In other words, I view permanent life insurance as a luxury once you’ve satisfied all of your foundational needs....and only IF legacy planning is important to you.
But, what’s the key here? You are buying permanent insurance BECAUSE IT IS LIFE INSURANCE, and you WANT THE INSURANCE.
If legacy planning is not important to you, well, than quite frankly...we should not be discussing life insurance products regardless of what other name people have for it.
We should ONLY be discussing term life insurance, which we do with every single client of ours.
Keeping these thoughts about permanent insurance in mind will allow you to see through a lot of bad actors....and if you have questions about your overall risk management program...a comprehensive financial plan to understand where you stand can help.
As always, you can book a call with me here!