At what age should I buy permanent life insurance?
Like most things in life, there is always more to the story (not less) and permanent life insurance is a valuable tool when used in certain situations to achieve specific objectives. Recently, clients are asking the following question and it is deserving of a thoughtful answer: If I am someone considering buying permanent life insurance, at what age should I do that? Brief sidebar: permanent life insurance refers to both whole and universal life insurance products where the coverage is intended to pay the life insurance proceeds to the policy beneficiary when the insured passes at some unknown time in the future. Most, but not all, build cash-values and offer policy owners various choices on how the premium dollars are invested inside the policy. Factors to consider when discussing if permanent life insurance if right for you: • You bought term life insurance, it’s expiring and you still need the coverage. What if your current health or avocation status precludes you from buying new term insurance? In this situation, you may have the opportunity to exercise a term policy’s “conversion rights” and “convert” to a permanent life insurance policy without the need to provide any new medical evidence of insurability. • You want flexibility or need to control how long the insurance coverage lasts. • You need long-term liquidity due to the nature of your illiquid assets (i.e. the family cottage, farmland, commercial real estate, business interests and partnerships, etc.) Dividing hard assets fairly among children without offsetting cash is nearly impossible. Also, selling an asset under duress (a.k.a. “fire sale”) to create that cash prevents your heirs from receiving full value for your hard-earned assets. • You have a desire to pass wealth to the next generation; could health (long term care costs) and/or taxation (income taxation on the passing of qualified money, federal estate tax liability, etc.) severely deplete or degrade the value of your estate? As for age, in a general sense, these are characteristics of a permanent life insurance buyer:
At Rose Street Advisors, our focus is to help clients understand what options best help them achieve their specific financial, business and estate planning objectives. Our team is ready, willing and honored to help. Please Contact Us by web or call 269.552.3200.