As soon at Betty walked into my office she said “What are they waiting on?” Not knowing what she was talking about I didn’t know what to say. Betty told me she talked with two (2) friends last week who were totally discouraged about their life insurance. One friend (Jamie’s husband) has a 15 year term policy (he has paid the same premium for 15 years now the premium is going UP). Another friend (Susie) has a permanent policy that earns an interest rate.
Here’s what they told Betty. Even though Jamie’s husband had been contacted by his agent to talk about and review his term policy BEFORE the term period ended, he did nothing. He was convinced the best thing was to keep his policy until the term period ended and that his agent only wanted to “sell something”. The “term period” of his policy ended in February and he got his “new” premium notice – it is 4 times what it was! Now he has decided he needs to talk with his agent. Jamie’s husband called his agent who asked about his medical history, medication he takes and recent doctor visits. He really does not take much medication but he did have 4 bypasses last year. Yes, that will increase the premium on a new policy, if he can get a new policy. What about converting his term policy? If he converts his term policy he will not have to answer any medical questions; it will be very simple. Yes, but the timeframe to convert his policy has ended; he cannot convert his policy. His options include continue his current policy with the premium increasing every year that is more he has budgeted, apply for a new policy and hope he will be accepted or drop his policy and have no life insurance at all. Have you noticed that interest rates are less now than they were in 1997? In 1997 it was not unusual for a life insurance policy to earn 6.75% interest and guarantee 4% interest. Policy holders did not want to assume a conservative 4% interest – goodness! why? They were convinced that no one would ever pay only 4%; that was the minimum! Today policies may earn 2.5% or 2% interest. Susie has been looking at her policy every year. Unfortunately, that is all she has done; she was certain interest rates would go up and stay up. Today instead of her policy staying in effect until she is 83, her policy is going to stay in effect until she is 73. Susie is 71 now. In 1997 Susie didn’t think she’d need or want her life insurance policy past 83; things have changed. To keep her policy more than 2 years she will have to increase her premium – an unexpected, unbudgeted cost item. “What are they waiting on?” Ruth asked. Review your life insurance now – what are you waiting on? Call me at 501-868-6650 and say ”Caroline, can we talk?”
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AuthorCaroline Beauchamp specializes in personalized life and health insurance solutions. Archives
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