by Jim Gaskins
This is often a very good starting point for Public Safety employees. If you have a family, or if there’s a chance you’ll have a family someday, life insurance is going to be the first recommendation, but we should approach it from an overall point of view. And this is actually true even if you don’t plan on having a spouse or family, believe it or not. I’ll go into more detail on that with an in-depth explanation in a later article, or if we meet.
Why life insurance? Well, for most people, it’s obvious. You are either the primary income source or a co-income source for the family. If something were to happen to you, and being in a more dangerous profession, we all know that’s a possibility, your family could be devastated financially. Your job does offer group coverage, but it’s quite limited, isn’t nearly enough for most people when you’re young, and then automatically decreases over time. In nearly all cases where you can qualify for a plan, you’re better off getting it on your own.
So the question for most people is this: “What type of coverage should I get, and how much?”
For starters, it’s going to depend on your individual circumstances. How old are you? How many dependents do you have? Does your spouse work? We would discuss this in detail and go over your budget, among other things. But first, let’s cover the basics.
To begin with, you’re usually better off working with a broker, like United Financial. Having access to dozens of different insurance companies, we can always select the best price and value for you, because we don’t work directly for any insurance carrier. That means that we’ll have the best option for any case, including yours. Being able to choose from dozens of companies, and already knowing which few are the best for any particular age group or type of insurance, we can make certain that you’re getting the best value.
Breaking this down, there are basically two types of life insurance, no matter what company you get it from. One is Term, and the other, Permanent. They are what they sound like. Term is for a certain length of time, a term such as 10, 15, 20 or 30 years. If you pass away in that time frame, the insurance company cuts a check to your beneficiaries. If you live past that term, then you’re going to be shopping around for some coverage when the term ends, but when you’re that much older, and the money you put into it just goes to the company, much like homeowners or auto insurance. Fewer than 2% of Term policies pay out (which is, in a way, a very good thing). Sometimes this is the perfect fit anyway. And very often, it’s an ideal tool. And Term coverage, done properly, is quite inexpensive for most people, depending on age, of course.
Permanent works a bit differently. For starters, it doesn’t go away. One way or another, you get your money out of it. There are multiple types of permanent coverage that we can cover at a later time or if we meet regarding your own situation. In addition to never going away, Permanent policies also have the aspect of building cash over time (some better than others). This is important because it’s your money, whenever you want or need it, and done correctly, it’s entirely tax-free. The right one can not only provide protection (from illness, both critical and long-term, as well as the death benefit), but makes for a tax-free nest egg that is often far better than a regular retirement account. Sounds implausible, right? There’s an exact, technical, mathematical reason for how this works. This type of coverage also costs more, but can very much be worth it.
We will assess your situation and go over the options, show you the actual numbers, work with your budget, and make sure you’ve got the exact right plan.Regardless of what fits the best, this is one thing you don’t want to put off. Unlike other investments, you have to medically qualify, so you’re better off getting something while you still can, and it will never be less expensive than it is right now.
*Note: I’ve added this in April, 2022 because of a trend I’ve seen happening and statistics I’ve read about in industry publications. There has been a marked increase in what is termed “All-Cause Mortality” in working age people (ages 18-65). What this means is that the number of people in that age group who pass away has dramatically increased over the previous year(s), and it’s not due to Covid. This can lead to much higher premiums. My advice is always the same. Get the RIGHT coverage while you can.