Life insurance is considered a necessity in our world today but the kind of life insurance you choose is up for debate today even more than it was in the days of our fathers and mothers. In those days they searched for just enough to “bury” them. In later years it became the “investment” approach to life insurance. Any good life insurance agent will tell you “life insurance” is not the best way to save for the future. It is a stop gap measure.
Life insurance is designed to do two things. First, it must be enough to take care of your burial and funeral expenses after you are gone so your heirs don’t get stuck with the bill. This is the same line of thinking our forefathers used. However, it now has gone past that.
The other part of life insurance is the reason to have plenty of it if you are in the under 60 age bracket. You want to leave something for your spouse, or in some cases your children, to live on after you are gone. Noble idea to say the least. As one comedian put it he didn’t like life insurance because he didn’t want anyone to be happy when he died. Well as funny as that is, we always want to leave something for our loved ones.
The problem is we are living longer. Medical science and the drug makers have seen to it we now live well into our 90’s if we’ve lived any kind of clean life. Our 80’s are certainly doable for non-smokers and people without a family history of heart disease. So where does this leave us when it comes to life insurance.
First of all if you make it to your 90’s chances are you are not going to have insurance anymore. You’ve long passed the age of being eligible for some companies and the other companies aren’t about to let you off on the “the cheap.” It will cost you more than the average person can afford to keep it up. So that is a dead issue, no pun intended.
Whole Life isn’t efficient certainly and Term Insurance only covers you for a short time. You are hoping to live well past that short time and if you take a Term policy you have to either renew it or drop it at the end of the term. Renewing it will be very costly since the new rate will be much higher than the old one. Dropping it leaves you without insurance and means you’ve just waited your premiums for 10 or 15 years and you are still healthy.
Wow not too much choice there. The option may be to make sure you buy a policy which not only allows you conversion privileges (change from 10 to15 years and renew) or a policy you can sell.
There are companies which do buy insurance policies and they may pay you what you already spent in one lump sum, they may pay you less than you paid out in premiums or in some cases they may pay you more. This all depends on your health and your age.
For instance, if you are in really bad shape, and obviously you don’t have many years to live for whatever reason and your policy is worth $250,000 you will probably be able to get a nice lump sum back by selling it. If you’ve paid in, let’s say for grins, $50,000, you can probably easily get a $50,000 payment from a buyer, or even more. The reason? When you die and they convert it to a policy they can pay premiums on, they are going to get the $250,000!
If by chance you are in very good health and the Term policy is running out, they are not going to be nearly as interested in buying it because of the money they will have to pay out to keep it going until you do die. It is simple math.
Either way it is an option you should consider when you go shopping for insurance.
