I have a financial planner who thinks that I should get some term life insurance. I have never thought of term life insurance as a good idea, but my real estate portfolio might present more headaches than happiness if I were to die tomorrow. Does anyone have ideas about this? Am I just getting a sales pitch?
What’s your situation? Do you have small children and a stay at home spouse? Are you the primary wage earner? If you were to die tomorrow, how will the people you support now pay their bills? What estate planning do you have in place? If your real estate income is providing the income, can your heirs handle the business? Do they even want to? What’s your plan for estate taxes when your portfolio exceeds the exemption?
To add to BLL’s questions (which, BTW, were ‘spot-on’): What happens to your RE investments if you die? How are they held? Do you have a will? Does it set anything out?
You have a planner (whom I assume is being compensated) - why would you not listen to him? Term life insurance is relatively cheap if you are young and reasonably healthy.
Keith
Go to www.selectquote.com
This site has the highest rated insurance companies in the U.S. quote you for the insurance you need. It takes a few minutes to fill in the general info and they simply pass it along to all the companies listed on the site.
Selectquote will notify you of the best prices they receive and you are under NO obligation to do anything. If you decide to apply for term insurance, the Insurance company you select will send a local paramedic or nurse to your home or office and they take a blood and urine sample, ask you a few questions and your done.
I got $500,000 of 25 year term insurance through them about 5 years ago for $400/year. If anything happens to me… my wife or son receives $500K.
At that price it’s crazy not to have it. I think it works out to less than $8/week
Thank you for all of the feedback. Based on the questions, the answers become self evident. The issues of will, trust, umbrella insurance, how assets are held and so forth are all under consideration. I have an inner skeptic whom I listen to intently, so I like to double check these things.
Well, at least you adviser pointed you to the cheapest type of insurance. If he had told you that you REALLY need to get you one of these whole life policies…then I would be suspicious. My wife works for a financial planner and, while they make a little bit when they refer some life insurance business, it is a paltry sum and more of a PITA than it’s worth. My suspicion is that he really had your best interests in mind.
Keith
Something no one else mentioned - you look irresponsible to a lender if you have a family, own real estate and other assets, and have no life insurance. You NEED life insurance and you need to get an amount that shows you understand the serious nature of your death. I personally deal with a great guy at New York Life. Strong company and well trained agents. Cheapest is not always best with life insurance! Read that sentence again. Do not buy from some obscure company. The devil is in the details of a policy. I have an agent that I absolutely trust to take care of my family if I die, and I still pay very competitive rates. Companies like Northwestern Mutual or New York Life are solid. A good agent should listen to your situation THEN recommend a life insurance product, not the other way around.
Yes, you are getting a sales pitch. The planner is probably an agent for a company that sells life insurance, and the planner will earn a commission if you buy a policy through him.
That does not make the advice invalid. The question the planner needs to help you address is how your family survives if you die and your income stops. The easiest solution is term life insurance.
The harder solutions are to (1) establish an investment portfolio that generates enough passive and/or portfolio income to replace your earned income should anything happen to you, (2) reduce debt or eliminate the liabilities in your life that consume your income, and, (3) structure your estate in such a way that you minimize or eliminate federal estate taxes and probate costs while insuring an orderly transfer of the maximum potential wealth from your estate to your heirs and maintaining business continuity.
The hard solutions take time, and until they are in place, use term life insurance to bridge the gap. Consider a fixed length, level term life insurance policy. Maybe a 10 year or a 20 year policy is all you need until your financial strength suggests insurance is no longer necessary.
It makes borrowing a little bit easier when an underwriter sees that if you die the bank will get their money back. And you can leverage that when you apply for your loan.
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I’ve NEVER had a lender ask if I had life insurance. Their insurance is the property, not your insurance policy.
And BTW, definitely go with the term insurance. To refute what artyman said, with term insurance cheapest IS usually the best. Term is pretty cut and dry. If you die while you’re within this “term”, we will pay. It really is pretty simple.
Where it gets VERY complicated is when you combine a “savings” account into your life insurance and EVERY financial expert will tell you to NEVER do that. Insurance with a savings plan attached is a true “sales pitch.”
IMO, if you’ve been working with this planner for a while then he knows you. He knows your family, your business, and most importantly, your responsibilities. It really does sound like he’s looking out for you.
I agree with fdjake too. Selectquote.com is by far the cheapest out there. Definitely do some comparison shopping.
Good luck. :beer