Is my life insurance working for me?
Chris Clare
So you took out a life insurance policy four or five years ago that gave ample coverage for your financial needs and in that regard it should still be giving you the best deal for your money, right? Wrong. If you think like this you might as well take your money and spend it on lottery tickets in the hope that some day your numbers might come up and you hit the jackpot.
The chances are the life you are living today is very different from the life you were living 4 or 5 years ago. Let's look at an example. A little more than 5 years ago Mr.x was single, fancy free, raking it in as an internet whizz, with expensive and dangerous pass times like snowboarding and base jumping, with an active social life, a posh rented condo and little or nothing to hinder his life motto of living fast and dying young. Now Mr.X has a Mrs.X and a couple of little baby X's running around. The high paid job has given way to a steady safe not so highly paid job, he has a mortgage on a three bedroom semi, nursery fees, school fees, golf club fees and his wife's gym membership to pay for and the disposable income isn't as disposable as it used to be.
Maybe a bit extreme, but not that far from the truth for a lot of us. The life insurance he had before wouldn't even scratch the surface for what he needs today. Everyone's circumstances are likely to change as their lives change, so it is always important to look at your changing status and make the necessary allowances for them. Maybe for you all is as it has been and you have no need to review, but if not, by reassessing your life insurance needs, you can rest easy knowing that all potential outcomes are well covered for.
If you have a meeting with your agent, he or she will be more than happy to go over life altering events and circumstances that can change your need for coverage and the need to increase or decrease that coverage to save money and or make sure that all of the many contingencies are factored in so that when the unexpected happens, you have the coverage to handle the situation without having to face financial ruin or bankruptcy.
The two choices you have are term life or whole life insurance. Depending on your situation one is going to be a better option than the other. The term life policy may cost less but with whole life you can take into account the need to borrow against the policy if financial shortfalls should arise.
The most popular option for most is whole life due to the fact that the small cost difference is outweighed by the advantages of being able to cover any financial surprises that may arise. Basically, depending on the situation that occurs you can either cash in the policy, or if the problem is minor, you are able to borrow aganst it. In other words it is a policy that allows for access without incurring harsh penalties.
It is really down to your personal circumstances which policy is best for you. Your job, family, current financial situation all need to be considered. The best option is to first talk to your own financial advisor as it is their job to advise you on what you need. Alternatively, contact your lender via the internet if you can and research your options from the comfort of your home.
This article hopefully shows that whilst there is a choice to make, it should not need to be a daunting decision. You just need to remember that certain situations may arise in the future and like all things in life it is the better option if you are prepared for them. As long as you cover yourself you will be in a win win situation. If something does happen then you know that the policy is in place to cover that eventuality and if not you at least have peace of mind. If you obtain whole life and nothing happens then you also have a nice nest egg with which to plan your retirement around. But the important thing is not to put off to tomorrow what you can do today because you never know when that unexpected event may arise.
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