Regardless of your age, if you are important to the ongoing financial security of someone whom you love and care about, it is probably time to review, renew and report on your life insurance coverage. From recent experience with friends, family and colleagues, I can tell you that insurability is a fleeting, ever-changing part of life. If you have not looked at your coverage in the last year or so, or if you have no coverage, now may be a good time to re-examine your current and future needs for life insurance protection.
The easy answer for coverage is to plan for term life insurance. It is generally inexpensive, the premiums can be locked in for up to 30 years, and the death benefit will remain constant, assuming timely payment of premiums. Some companies will allow you to convert the term to permanent coverage in the future, regardless of insurability. Term insurance especially makes sense for a young couple with a new child and/or house. However, do not eliminate automatically the purchase of permanent insurance. There are some new and attractive riders available that may address long term concerns. For example, there are now riders that allow you to develop an income strategy for your beneficiaries. Instead of receiving a lump sum death benefit, the insured can designate that a beneficiary receive a small lump sum payment followed by an income stream from the remaining death benefit over a period of predetermined years. Electing this rider may reduce the premium for the coverage, plus it allows you to protect a beneficiary with no financial experience from the stress of handling large sums of money. The election to pay a lump sum versus an income stream can be made on an individual basis; i.e., two kids could get a lump sum while one gets a stream of income. I think this is an excellent improvement for the industry.
Another major development that has become more available over the last year or so is a rider that allows you to use death benefit for long term care coverage. The plus to this rider is that, assuming premiums are paid timely and policy loans are not taken, the insured should not have to worry about future premium increases. This is important. I have a long term care policy that proposed a 60-70% premium increase last year. Fortunately, I was able to restructure my policy to avoid the increase, but there is no guarantee that another increase will not rear up in the future. Tying your long term care to a life policy avoids this problem. Do note that the death benefit of the policy will be reduced by any proceeds used for long term care. There are also some companies offering a critical illness rider that allows for a designated amount of the death benefit while living to help offset reduced earning capacities resulting from a heart attack, MS, Parkinson’s, strokes and similar illnesses. These are some of the new developments, but don’t forget the traditional—and important—benefits of life insurance. The death benefits can provide tax-free funds to pay off business, personal and education debts. It can pay estate taxes and provide beneficiaries with funds for future living expenses. The proceeds can supplement children’s retirement assets and replace assets depleted by illness or lifestyle. If you wish, you can fund a legacy at your church, school or civic club. Is the coverage cheap? No; but you may be surprised at its affordability. Get some while you can, because tomorrow, it may be too late. I know this is true, from personal experience.
I haven’t used a country song in this article lately, so I am going to make up for lost opportunities. Thomas Rhett has a new song, “Beer with Jesus”, that has a few interesting lines, so bear with me: “I’d be sure to let Him do the talking, careful when I got the chance to ask: How’d you turn the other cheek to save a sorry soul like me? Do you hear the prayers I send? What happens when life ends and when (do) you think you’re coming back again? I’d tell everyone, but no one would believe it if I could have a beer with Jesus. Have you been there from the start? How’d you change a sinner’s heart? And is heaven really just beyond the stars? Is Mom and Dad alright? And if it ain’t no trouble, tell them I said hi”. A simple song with simple questions. Can you answer them? What would your questions be if you had a chance to sit down with Jesus and share some refreshment? How would you feel, knowing that there are no secrets, that your life is an open book for Jesus? Maybe you and I should start living our lives anticipating the possibility of such an event. I’ll bet that our lives and the lives of the people around us would improve drastically. From Psalm 37: “Be still before the Lord and wait patiently for Him”. Happy Valentine’s.
Securities, insurance and investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment advisor 3416 North Blvd, Alexandria, LA 71301, (318) 448-3201. The views expressed are not necessarily the opinion of FSC Securities Corporation.