Life Insurance: Land Mine or Gold Mine?

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Published November 27, 2012

Vince Lombardi once held up a football and said to his team, “Gentlemen, this is a football.”  I’m sure someone on that team thought: Really?  A football?  Wow, I would have never guessed.  But of course, that wasn’t the coach’s point at all.  He simply wanted to communicate that basics and fundamentals are usually the difference between a win and a loss on the stat sheet.  And in my career I’ve found the same to be true for individuals’ finances as well.

In my practice I believe there is one financial “football.”  And it just may surprise you what it is.  Are you ready?  “Gentlemen, this is life insurance.”  Yes, life insurance.  This is the one vehicle that can almost always put a win on an individuals’ scorecard.  Let me take you on a little journey.

One of the first things I ask a new client is what life insurance policies they currently have in place. You might be surprised at the answers.

While some folks know exactly what policies they own I have found that to be the rare exception. Most people have little idea. And I don’t blame them. Most people don’t live each day thinking about their mortality; however, life insurance can be much more than death and mortality.  Actually it can be quite exciting.

Most people have not looked at their policies for years. Usually, after digging through their files, they pull out a worn and yellowed policy.  We blow the dust off and cautiously turn the page to look inside.  But what we find is that sometimes this policy is a Land Mine and sometimes it’s a Gold Mine.

Let’s look at a “Gold Mine” example first. What are some of the circumstance that can make an existing life insurance policy a gold mine?

Often people have an existing cash value life insurance policy (Universal Life or Whole Life) that has built up quite a bit of cash. In many cases that cash value can be used to purchase a new and better performing policy.  One that increases the death benefit, lowers the premiums … or even both. In fact I have had clients almost double their death benefit while lowering their monthly premiums down to zero. That’s right zero. Now that’s a gold mine. I know it sounds too good to be true, but it’s not.  It’s happened in many cases simply due to the positive changes that have taken place within policy structure over the years. You might be amazed at how many people are sitting on these gold mines … and they don’t even know it.  It might even be you.

Ok, that was the good news.  Now let’s look at a land mine.

I call a life insurance policy a “Land Mine” when something is getting ready to go wrong and a client doesn’t even realize it.  Or they do realize it but they don’t know they can do anything about it.  For instance, maybe an individual has a cash value policy that has not been preforming like it was projected to. Instead of lasting until age 100 (for example) it is now scheduled to run out at a much earlier age.  In the industry we say the policy is getting ready to “blow up.” The only way to discover this, however, is through a policy review.  And I encourage regular policy reviews – for everyone.  Annually if possible.  But the good news is, if you discover this early enough, you likely have a chance to fix it.  However, if it goes undetected, you could find your coverage dying before you do.  (Yeah, that’s a joke, but not a funny one.)

The bottom line in all of this is that it’s critical to work with an experienced agent who is proactive in walking you through a regular annual review.  A trained, qualified, honest individual who will stand watch and make sure YOUR policy fits YOUR needs.  An individual who can let you know if you are sitting on a land mine or a gold mine.  Trust me, I hope it’s a gold mine.

At our practice we believe regular policy reviews are the difference between a winning and a losing season. 

Please have your policies reviewed as soon as possible.  And I hope that when you blow off the dust from your plan it doesn’t blow up, but rather reveals something wonderful for you and your loved ones.

Chuck Sampair is a retirement and insurance advisor based out of Federal Way, Washington. Specializing in helping clients find the best insurance policies for their goals and dreams.  Chuck offers consultations to both existing and new clients to update insurance policies to get the most out of your plan. For more information or to schedule a consultation, contact Chuck at 253-588-1678 or email him at chuck@crfinancialwa.com

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http://www.foxbusiness.com/personal-finance/2012/11/27/life-insurance-review-land-mine-or-gold-mine/