Updated: Nov 15, 2019
Hopefully you’re one of the many people who has refinanced your mortgage and taken advantage of these crazy low interest rates. If you haven’t, please lean over to your spouse and tell them to give you a swift kick in the pants. You might just need it. If you are paying 1% over a market interest rate on a $250K mortgage you could overpay for your home loan over $50,000 during the life of your loan. Who would do that? That’s a crime against self, and not a victim-less crime either, you’re the victim. Did you ever think of applying that same logic to your life insurance? Likely not. Want to be smart with your money? Likely so.
In today’s economy no one can afford to overlook low hanging fruit like refinancing your mortgage to save money. Few people, however, know that this same low hanging fruit may also apply to your Life Insurance policy? I want you to put this on your New Year’s “to-do” list right now. Give yourself a note to contact your trusted advisor on this topic, if you don’t have one you’re welcome to contact us.
In 2015, the IRS and the SOS – Society of Actuaries released current mortality tables for 2016 which show that once again we as a society are living longer. What does that mean? It means that the cost of life insurance is going down, again, just like mortgage rates have gone down. It also means that you are likely paying too much for your current life insurance policy. By “refinancing” via trading in your old policy for a new one, you may be able to get more coverage for less money, and/or just lower your premiums.
You might find out that a “bank on yourself” feature of today’s cash value life insurance policies offer significant tax advantages if accessed the correct way under IRS code Sec 72E and 7702. Many small business owners and larger income earners feel like they live today in a tax hostile environment. If that’s you, then you need to look at every tax friendly opportunity afforded to you, capisce?
New policies today can also offer “living benefits” as a rider or feature that can advance the death benefit if you become confined to a nursing home or are terminally ill. Few people purchase long term care insurance due to the cost and the unpleasant idea of being in a nursing home, but statistics from longtermcare.gov indicate that someone turning age 65 today has almost a 70% chance of needing some type of long-term care services in their remaining years. If you’re in your 50’s or above, this should be on your radar. I can remember my own parents saying that they never wanted to be a burden on their kids, but they are now turning older and sadly do not have any coverage of this type.
Most people opt for the cheapest term insurance that they can get, and while this indeed may be the best course of action for someone’s unique situation, it can also be a big mistake. Appropriate life insurance should be a cornerstone of any credible financial plan, and overlooking planning opportunities with life insurance in regards to asset protection, wealth transfer, living and death benefits can be a mistake of grand proportion. This year resolve to be smart and intentional with your resources. Your family is depending upon it.