Why would I buy this?
Basically, life insurance is meant to replace your monetary “value” to your family or your business once you’re gone. Most people consider the purchase of life insurance when they have known liabilities like mortgage debt and lost income earnings that need to be protected, or estate taxes that need to be paid. Generally speaking, life insurance is a needs based product when you are younger and your liabilities are high, and becomes more of an optional financial product as your assets grow.
How much is enough?
If you die, you’ll want your family to receive enough money to do more than just replace your salary for a year. We typically advise calculating the amount of your overall debt load and about fifteen years of your income as an estimate of how much life insurance you require. Current low interest rates mean that the amount of life insurance required to simply pay off your debts and replace your income is much higher than you think.
What’s the right kind of policy to buy?
There are several different kinds of life insurance products for you to consider. Term Insurance is less expensive initially, but rises exponentially over time. Whole Life has an attractive investment account component, but is very expensive and lacks the premium flexibility that most clients are looking for. Universal Life combines low cost insurance, with a tax exempt, flexible premium investment account, which in our view provides the best pricing and value for clients.
How does my broker get paid?
Life insurance products are priced with the broker’s commission already built into the policy. You should be aware that there are significant differences in commission amounts between these different insurance products. Unlike many other professions, there is currently no requirement to disclose these fees to clients in the purchase of a life insurance policy. Allan Financial has offered a client rebate program since 2006 which re-allocates a portion of our fees back into the policy reserve account. This is specifically designed to bring better value to our clients through lower cost or increased benefits.
How do I get started?
The acquisition process of life insurance may be a bit more complicated/difficult than you might expect. Typically, the first step in the process is a meeting to estimate your needs and define your budget. Initial application forms will then be necessary to initiate the medical and financial qualification process. After you qualify, the insurance company sets in motion the approval of your policy. Once a policy is approved, a final meeting will be required for you to accept the final policy contract.
What happens after?
Regular reviews and monitoring of your policy performance takes place to ensure that it continues to meet your needs. We also evaluate new products and pricing options as they become available, to ensure that the policy you own is still the best option for you.
This is all just a brief summary, we’d be happy to discuss any of this with you further.