Ask Adam Goodman

Many people are paying more than they need to for their life insurance…

You may be unsure if you fall into that group!

It is interesting how many people treat their life insurance purchase, often delayed and when finally done, a feeling of relief, then the policy goes into a file cabinet or desk drawer rarely looked at or reviewed…

That can often be a very expensive decision…

In working with individuals and talking with them about their life insurance protection or supplementing tax free retirement income through a permanent life policy, I often come across a situation where the individual has a policy that has been in place for many years, often decades, and sometimes many decades. Their parents may have got the policy for them when they were young, and they think it has to be a great deal, since it was gotten so long ago…Unlike many industries where costs of services have rapidly escalated over the years…Life insurance is the opposite, costs have actually come way down, as people are taking better care of their health and living longer. The Insurance Information Institute says that term life insurance premiums are now 50 percent lower than they were a decade ago.

Here is an article going into more details regarding the situation.

Did you know, if your policy was issued before January 1st 1989, the pricing was based on 1958 life expectancies, and did not differentiate between a smoker and non smoker. Since the 1958 tables, the life expectancies tables have been updated twice, based on studies done for 1980 and 2001.

If your policy was issued between January 2nd 1989 and January 1, 2009 then your cost of insurance is based on the 1980 CSO tables, which did differentiate between life expectancies of smokers and non smokers, and reduced the average mortality costs, by about 40% compared to policies issued pre 1989.

So if you have a policy issued before 1989 and you are a non smoker, you may be very happy with the comparisons of your in force policy to what a current policy could look like.

If your policy was issued after January 1, 2009 then your policy is based on the 2001 CSO tables, which based on innovations of modern medicine and medical practices, again reduced the average mortality costs by about 30% compared to the 1980 tables…

If you want to know more about the commissioner’s standard ordinary mortality tables click here

So what is the bottom line?

If you have a policy issued prior to 2009, you may be able to save a significant amount of money by getting a new policy based on the 2001 CSO tables.

For term policies, we are often able to extend the length of coverage for several years at the same cost, or get a larger death benefit for the same premium.

If you have an older permanent policy (could be whole life, universal, variable universal or indexed universal) that has cash value, you may be able to do what is called a 1035 exchange and transfer your cash value into a new policy based on the lower mortality costs.

Aside from the lower costs of the insurance, there are other benefits to looking at upgrading your permanent life insurance contract. Over the years life insurance policies have been enhanced to provide many living benefits…For example a chronic illness rider, will allow you to use a portion of the death benefit if you find yourself in a situation needing long term care and not able to do 2 of the 6 daily living functions on your own. This could replace the need for a standalone long term care policy that you don’t know if you will ever use…

Did you know an indexed Universal Life can provide double digit growth potential with principal protection of your cash value? Which is often greater growth potential than a whole life or universal contract, and provides principal protection not found in a variable universal contract.

Think of it like this when you bought a car 20 years ago, it might have had manual roll down windows, a cassette player, vinyl seats, your cell phone was the size of a brick (if you had one)…the same model automobile today might have built in navigation, built in blue tooth, leather seats, 6 disc cd changer and satellite radio…newer up to date features that many people find more desirable than what was available decades before, at a much higher cost however…

Well with your life insurance due to the longer life expectancies many people are finding newer policies with richer benefits, yet at a lower cost! How exciting is that!

How often do you review your car insurance? Health insurance? Homeowners insurance? Many people do so annually or at least every few years. To ensure they have the right type of coverage in place, and aren’t paying more than they need to. Do the same with your life insurance!

We haven’t even discussed how your life situation may have changed, and your coverage needs may have changed since you got your policy? Have you had a child? Gotten married? Started a business? Bought a house?

Top 3 reasons people are updating their old life insurance policies

1) Lower their cost of life insurance

2) Add living benefits features

3) Optimize their cash value growth

If you or someone you know would like an existing policy reviewed to ensure you have the lowest insurance cost available, and the right benefits to meet your objectives. Call 702-483-SAFE (2273) or send an email with the subject title “request for policy review”, and we will compile the information needed to review your policy.

Adam Goodman resides in Las Vegas, NV and is currently licensed in Nevada & Arizona. The information contained in any of our informational resources (including but not limited to this post, our websites, or our workshops) is not legal, tax or specific financial advice. Before implementing any financial concepts, strategies or plan; it is recommended that you work with a qualified professional. As each individuals situation is different, and what is best for one, is often not the best option for another.