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Insurance Planning

Premium Rates May Warrant a Look at Your Policy | Baird Retirement Management

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July 31, 2017

Jul 31, 2017

10:41 AM America/Chicago

Life insurance can provide unique financial planning benefits, including an extremely tax-efficient way to transfer wealth to your heirs through the death benefit. However, the amount of the premiums paid on life insurance policies may determine whether your policy is still properly aligned with your financial goals.

Not All Policies Are Created Equally

There are important differences for you to be aware of between the two basic types of life insurance policies.

Term insurance generally has lower premiums but does not build up cash values that you can use in the future. It generally provides coverage for a level period – 10, 15, 20 or 30 years – and pays a death benefit only if you die during that term.

Permanent insurance policies charge higher premiums in the beginning than comparable term policies. The part of the premiums not used to cover policy charges and expenses is invested, either by the company or by you, and builds up a cash value that may be used in the future. Permanent life insurance policies – including whole life, universal life and variable universal life – are typically designed to provide permanent death benefit protection and cash accumulation.

Regular Insurance Reviews Are Essential

Changes in your personal or professional status and income level can affect what you’ll ultimately need from your life insurance policy. These life-changing trigger events include:

  • Change in marital status
  • Becoming a parent or grandparent
  • Change in employment status or benefits
  • Change in health or lifestyle
  • Change in business ownership
  • Change in assets or net worth

If your current and future goals and objectives have changed substantially, the most appropriate life insurance policy for you may have also changed.

Your Financial Advisor can help you assess your current and future needs and, after gathering your current policy information, work with you to determine if your existing policy is on track to meet your long-term goals. In addition to determining whether you have appropriate coverage, the review analyzes the ownership structure, beneficiary designations and overall cost effectiveness for your policy.

The Time to Review Your Policy Is Now

As consumers’ needs have evolved, so has the life insurance industry. New product features along with fluctuations in premiums, interest rates and  carrier ratings may affect the suitability or relative value of your policy over time.

Depending on how long ago you established or last revisited your policy, you could be well past due for a review. If you’re thinking about re-assessing your existing policy or establishing a new one, acting sooner could be to your advantage. 

Robert W. Baird & Co. does not provide tax or legal advice. Please consult with your tax and legal professionals.

Article provided by Baird for the Pfeil Leatherwood Group at the Houston – Memorial City office of Robert W. Baird & Co., member SIPC. Rick Pfeil and Matt Leatherwood have 24 combined years of financial services industry experience, and can be reached at 

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