Almost anyone who understands life insurance knows that whole life insurance is a vital long-term planning tool for your finances, yet many individuals opt for the cheaper term-life policy. Many consumers use term-life policies to satisfy an immediate coverage need – while forgetting to think about the long haul.
In theory it sounds like a good idea but, it's terrible in practice. Only 2% of term-life policies ever pay out. Thus, 98% of individuals virtually flush money down the drain with these policies. On the other hand, whole life insurance policies provide your family the peace of mind they need because it covers you throughout your entire life.
Luckily, you have the ability convert your term life policy to a whole life policy. Here are a few good reasons why you may want to convert your term life policy:
1. Outliving Term Life Insurance
Americans are living longer than ever. Everyone in the insurance industry knows this. You've seen the premiums. The average lifespan for people in our country is reaching a staggering 79 years of life. That's impressive. It also means you're more likely to outlive your term life insurance policy. Consider what the average lifespan will be in 20 years once your policy expires!
2. Practical Estate Planning Measure
Term life policies cannot be perceived as a meaningful resource for estate planning. Whole life insurance plans carry security and value while taking your estate into consideration. Wealthy consumers concerned with estate taxes for beneficiaries after death may find great value in converting their term policies to whole life.
3. Upgrades Are Preferable
Many families buy term life coverage because they cannot afford whole life when they're younger. They may have student loans to pay down or kids to account for. Once these consumers are more financially secure, they may desire the security that a whole life policy can offer.
4. Family Cost Anticipation
Some families know that steep costs will continue to rack up once a family member is gone. If you believe your family will find themselves in such a position, then a whole life policy can ensure the financial security your loved ones will need in the future.
5. Retirement Restructuring
If retirement is on the horizon, then ensuring a sufficient income throughout your golden years may be a priority. A whole life policy, which is tax exempt, is an excellent way to save and ensures a particular chunk of change down the road. In addition, this savings plan is tax-free. Tax-free permanent life insurance plans can also be cashed out in later years for retirement income.
6. Changing Financial Perspective
Term life insurance is popular when individuals are young and healthy. As aging occurs, permanent life insurance becomes more and more necessary. Many convert a term life policy when anticipating a medical exam may be required to purchase a whole new policy.
The Choice Is Yours
No matter what financial goal one is shooting for, a whole life policy can add value to your potential income down the road. Term life insurance is ideal for the young and healthy, but things change as aging occurs. By understanding the reasons to convert your term life policy, you can save yourself a lot of hassle down the road. Be smart with your life and the lives of those that depend on you.
If you have questions about your Term Policy, or other Life Insurance questions contact Skyline Risk Management, Inc. (718) 267-7700 to voice your concerns.