Do you have regret about purchasing a whole life cash value insurance policy or universal Life policy?
Worrying about making your payments in the midst of these terrible inflationary times that no one saw coming? You are not alone and you have good cause to be worried.
Many policies are bought on emotion or impulse, often from a spreadsheet that highlights future performance without any guarantees. The issues that I am currently witnessing are people struggling to maintain their mortgage payments, and struggling to make ends meet with the high cost of everything (groceries and especially fuel).
Suddenly that $400.00 monthly payment for life insurance is no longer feasible and one might have no choice but to terminate the plan simply because the budget for it no longer exists. What an unfortunate waste of money. Most of the cash value life insurance plans are back-loaded which means it takes many years to accumulate significant cash value.
In times like these, people are looking to cut expenses, and insurance is one area that is usually the first casualty. The need for insurance still exists, but the ability to pay high premiums may no longer be there. This is where I could help you!
Now more than ever is the time to perform a full financial review, an overhaul, and an assessment of how you are managing your finances. It is important to prioritize your expenditures with respect to your cash flow.
In my 32+ years in the life insurance industry, I’ve generally maintained the principle that term insurance for most people, is the right solution. I know there are people who are going to say well, what happens when the term comes due and the rates go up, maybe I will be uninsurable? How will I afford it in the future? All valid concerns, however, did you know you could convert your term insurance to a permanent plan up until the age of 70 without a medical? Did you know that you could convert a ten- or twenty-year term to another term product in the first 5-7 years of the contract without a medical?
What many of my clients do is re-apply for new term insurance within the first five years, thus extending the period they are covered for at a reasonable cost. If you manage your term insurance well, it will serve its purpose. Don’t forget under our tax system in Canada, it is important to focus on paying down debt, like mortgages that are not tax-deductible, and contributing to your RSPs as well as TFSAs and RESP.
When purchasing life insurance you must take into account the time value of money, which is the most important factor in life insurance. The 500,000k benefit purchased today at a discounted rate of 3% will only be worth $277,000 in 20 years. People overlook this fact all the time and focus only on the death benefit.
In essence, if you are someone who is struggling to make your life insurance payments, or thinking maybe the policy you currently have may not be the best option, why not reach out to me? I would love to learn about your situation and discuss the pros and cons of all options. Let’s sit down and review together and come up with a solution that works for you.
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