Posts Tagged ‘Life insurance’

Permanent or Term Life? There Is No One-Size-Fits-All Answer

December 12th, 2014, No Comments, be the first ».

Different clients have different needs. It’s a simple truth, and the main reason the advice and services of insurance and financial advisors is so valuable to American families. How many times have you picked up a magazine or newspaper and read a piece by a personal finance personality advising all of his or her readers to avoid permanent life insurance – to buy term and invest the difference?

If only life was so simple. But in the real world, different people and families, unsurprisingly, have different goals. As NAIFA President Juli McNeely says, “We would never diagnose health issues by reading a book and caring for ourselves. Why would we want to handle our financial health without seeking the assistance of a professional?”

Back to the case of term versus permanent life insurance – a good advisor can tell a client there really shouldn’t be a “versus” in that statement. Term and permanent life are entirely separate products with different purposes. Term helps a client mitigate a specific financial risk that exists for a finite period of time. Permanent, on the other hand, can be a part of a life-long financial plan.

A professional advisor will explain how permanent life insurance often:

  • Provides life-long coverage with a guaranteed payout.
  • Accumulates cash value tax-free.
  • Pays dividends.
  • Allows policyholders to take out loans against policy cash values at low interest rates, without credit checks, and for any purpose.
  • Encourages policyholders to put money away for the future. (How many people who go the term route actually do invest the difference?)
  • Provides opportunities to obtain additional life insurance coverage later in life without a medical clearance.
  • Can include long-term care or disability insurance riders.
  • Can include investment components.
  • Can be structured to fit within a client’s budget.

Insurance and financial products can be very complex and confusing. There are very few one-size-fits-all answers to financial questions. Any advice columnist or television, internet or radio personality who does not urge consumers to meet personally with a financial advisor does their audience a great disservice.

Buying term and investing the difference may make sense for some consumers. For others, it certainly does not. NAIFA members, and other professional advisors, help consumers determine what financial and insurance strategies are best suited to their personal needs.

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Americans Underutilizing Permanent Life Insurance

September 18th, 2014, Comments Off.

As longevity and the cost of living continue to increase, Americans may be overlooking a key opportunity to strengthen their financial foundation. Despite the many advantages of permanent life insurance, only 22% of Americans currently own a permanent life insurance policy, a fraction of the 66% who have savings accounts, according to Northwestern Mutual’s 2014 Planning and Progress Study.

In contrast to savings and investing vehicles that focus on either asset accumulation or risk management, permanent life insurance is a multi-faceted financial solution that augments a death benefit with a number of important living benefits.

“Permanent life insurance is the proverbial Swiss army knife of financial solutions because it can be used to tackle any financial challenge from leaving a legacy to dealing with a medical emergency,” said David Simbro, senior vice president, Northwestern Mutual. “Flexibility, combined with the fact that permanent life insurance is virtually recession-proof, means invaluable peace of mind in today’s complicated and unpredictable economic environment.”

According to Simbro, the advantages of permanent life insurance include:

  • Guaranteed growth in value over time: The cash value of a permanent life insurance policy never declines and is guaranteed to continue increasing over time, tax-deferred.
  • Flexibility: Policy owners can leverage the value to pay for college, fund a business, or address any number of planned or unexpected financial needs. Because of its assignability, the policy can also serve as collateral.
  • Retirement: Policy cash value can be leveraged to supplement retirement income.

Participating in LIAM
As the company that is committed to helping Americans achieve financial security, Northwestern Mutual is leveraging this month’s Life Insurance Awareness Month (LIAM) campaign to deepen awareness of permanent life insurance and how it can serve as the cornerstone of a sound financial strategy.

Simbro is encouraging consumers to meet with a financial advisor to explore the role permanent life insurance can play in their overall planning strategy. And Northwestern Mutual’s Online Learning Center features a wide range of resources and tools for individuals interested in learning more about the many attributes of permanent life insurance. For more information, visit www.northwesternmutual.com.

LIAM is a public-relations campaign coordinated each September by the Life Happens organization to increase Americans’ awareness of insurance and the critical role it can play in their lives. To learn more about LIAM and the tools provided by Life Happens, visit www.lifehappens.org.

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By Ayo Mseka
Editor-In-Chief

 

 

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