INVESTMENTS: Life insurance has its advantages

Life insurance! Just mentioning it brings preconceived ideas to your mind!

Back in the 1980s, used car salesmen and life insurance were considered “two peas in a pod!” Just the mention of life insurance sent people scurrying!

The old “whole life” policies were expensive and the cash value in the policy never gave much of a return. “Term insurance” was also expensive, and the underwriting process was cumbersome at best.

God, how things have changed! Today, life insurance is one of the most important tools at our disposal to ensure that financial goals and objectives are met. Life insurance can play an important role in providing death benefits for a variety of reasons.

There are two main types of life insurance policies; term life insurance and permanent life insurance.

Term insurance provides coverage for a specified period, usually between one to 30 years, and pays a death benefit if the policyholder dies during that period.

On the other hand, permanent life insurance provides coverage for the entire life of the policyholder and the death benefit is paid whenever the policyholder dies. The cash value in a permanent life policy can now work in a variety of ways and can be designed to suit the goals and objectives of the policyholder. Cash value returns can be determined using a “fixed rate” return, a “variable” or “stock and bond driven” approach, or a “fixed index” approach.

Many life insurance policies now offer health enhancement benefits that encourage healthy living. Policyholders can earn discounts on their premiums or cash can be added to the policy value by participating in wellness programs or achieving specific health goals, such as quitting smoking or losing weight. These benefits not only help policyholders save money on their premiums, but do much more. Healthy living habits will add money to the investment portion, provide gift cards and travel discounts, and more.

Exercise and healthy eating are important aspects of these “health enhancing policies” that encourage policyholders to lead healthier lifestyles!

Life insurance can be an important part of an estate planning strategy. Policyholders can name their beneficiaries and ensure that their loved ones are taken care of after their death. In addition, life insurance can be used as a source of income for a surviving spouse or children.

A second-to-die policy is a valuable estate planning tool that will have a much more reasonable premium than a single life policy and provide a way to pay estate taxes.

A safe, tax-free income plan can be added to the financial plan through a ‘minimum death benefit policy’.

Life insurance can be purchased individually by an individual for himself or by a company for its employees. Employer-sponsored life insurance policies can provide coverage at a lower cost than individual policies, and premiums can be paid by the employer. Group life insurance policies may also offer higher coverage limits than individual policies.

Many life insurance policies now offer long-term care benefits that provide coverage for nursing home or home care. These benefits can be added as a rider to a life insurance policy or purchased as a separate policy. This type of coverage can help ease the financial burden of long-term care for policyholders and their loved ones.

The evolution of life insurance policies has allowed them to provide more benefits and options to policyholders.

While the primary purpose of life insurance remains to provide financial protection for loved ones after the policyholder’s death, additional benefits such as improved health, estate planning and long-term care can provide additional peace of mind and financial security for policyholders and their families. Today, life insurance should really be considered another “asset class.”

The next time you hear from a life insurance salesperson, don’t run! It may have very valuable information for you, your family and loved ones!

And remember, stay the course!

Tim Tremblay is president of Tremblay Financial Services in Santa Barbara (

Leave a Comment

Your email address will not be published. Required fields are marked *