No matter how much I try to avoid repeating myself in these articles, I know that some topics demand repeating. One of those is a discussion of the role of life insurance in your overall financial planning efforts. In recent months, I have had several clients receive premium notices for term policies that had run past the original level term time frame. In other words, a ten year level term policy was now in the eleventh year. In most cases, the premium is much higher than the original premium. You still have insurance, but you will be paying much more than a new policy would cost. For example, in the last few weeks, a client brought in his premium notice for a $1,000,000 term policy that was out of the initial 15 year level term period. The premium jumped from the level premium of slightly over $4,000 to $18,000. It is important to pay attention to your policy limits. Fortunately, this person was in good health and the existing policy could be replaced with significant savings and more coverage. You may not be a fan of life insurance, but it has its place in your plan. In a March, 2010 article in Financial Planning Magazine, “New Life”, the author suggests that adding life insurance to a portfolio can benefit you in several ways. It can free up assets that are otherwise allocated for protection and legacy goals, it can guarantee a legacy and replace wealth for heirs in cases where death would occur after a market downturn. Remember, also, that the death benefit from life insurance is typically transferred income tax free. Assuming that you are insurable, the cost of life insurance is not going to be a large percentage of your retirement assets. If you do have health issues and own term insurance, review your policy. Many term policies have a provision that will allow you to convert your term coverage to permanent coverage based on the same rating you enjoy with the term policy.
In the same vein, recordkeeping is another area that we pay lip service to with little actual follow up. As is generally the case, where a need exists, an entrepreneur will try to find a solution. There is a service offered online by the name of WeRemember.org. Once registered, an individual fills out a form online listing insurance policies, wills, bank accounts and other pertinent information and where each is and/or who the attorney or advisor is that holds the actual hard copies. This company sends out regular e-mails reminding clients to update their information. No truly personal information, policy numbers or benefit amounts are kept by this service.
For parents with a child approaching graduation from high school and with plans for college, there was a memo in the May, 2010 Kiplinger’s Personal Finance Magazine concerning financial aid. Have your child apply to schools that he or she may be slightly overqualified for. Large public universities will have different systems for awarding aid than a small private school. The more types of schools that your student applies to, the better shot you have at a break on tuition. Also, even if you don’t think you qualify for aid, file the FAFSA. According to the article, very few students get nothing. Don’t be afraid to appeal a negative decision, especially if your financial situation changes for the worse. Finally, mention the competition.
A friend of mine lost his wife without warning last month. During the service celebrating her life, her pastor told us that my friend, during a conversation with the pastor, suddenly exclaimed, “I just can’t believe”….and I assumed that the completion to the sentence would be “that she is gone”. I was wrong. My friend proclaimed that he “just can’t believe that he was so blessed, so lucky to have this lady in his life for 42 years”. I try to say a prayer for my friend every morning, but I don’t have to worry. He believes. He knows that there’s more to life than what we experience in this world. How about you? There is a verse in a Bonnie Tyler song that says “forever’s going to start tonight”. God is waiting on you.
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