Why is it that consumers seem disappointed, even upset, when they find out they do not get any money back if they cancel or let lapse their TERM life policies? I am baffled at the displeasure in their voices, like they just paid in all that money and didn’t get anything back!! In fact I got a bit testy with a fellow the other day, I think I had just heard it too many times. So I sternly said to him “If you buy auto insurance and luckily you don’t use it, do you expect any money back? How about your homeowners insurance? If you are lucky enough to not have your house burn down or blown away, do you expect money back? You purchased term life insurance which is for a period of time and luckily you had the protection but didn’t need it!”
After I regained my composure and he submitted to having a better understanding of term life insurance he made the statement “I wish I had been a bit smarter about this when I purchased it.” I expressed my approval of the fact that he did have life insurance to protect his loved ones and commiserated with him about not purchasing permanent insurance in the first place.
I understand where the idea of getting your money back from a life insurance policy comes from. In the back of most boomers minds is whole life. Pay in and your beneficiary will get a death benefit or you can use the cash value to benefit retirement, but the most common product over the past 30 years has been term life insurance primarily because of cost. Term life insurance is the most practical choice if you are looking for a simple way for your family to be cared for following your passing, provided you pass during the term of the policy. I certainly am a big proponent of protecting loved ones with life insurance and understand that term life insurance can do that for a very reasonable cost, but there are so many other reasons to buy permanent life insurance or at least ladder some permanent life with your term insurance.
- Permanent life insurance can be guaranteed to be there beyond age 100 – provided premiums are paid and paid on time.
- You can access cash or get something back later in life – from the policy’s cash values.
- Tax advantages with tax deferred accumulation of the policy”s cash value – still an amazing benefit of permanent life insurance.
- Tax free access to the policies cash value – through policy loans.
- Locking in a cost while you are younger – a big advantage of purchasing permanent life insurance earlier rather than later.
- Cash values are protected from creditors, judgments, and lawsuits
- Allows you to have a forced savings plan – with a payment requirement.
- Benefits are paid out income tax free – benefits paid to the beneficiary at death are income tax free!
- Many plan options to make it affordable – a plan for almost every need.
Don’t give your clients the opportunity to be disappointed about not getting any money back from their term life insurance policy. Make sure they understand the benefits of having some permanent life insurance early in life rather than later. There are so many options in permanent insurance, there is sure to be one to fit their need and offer protection for a lifetime.