Critical decisions, such as buying a home, getting married or having children, require deliberate, thoughtful consideration. Indeed, the outcome of any one of these decisions can irrevocably change your life for better or worse. But, delaying the purchase of life insurance can be a costly mistake for you and your loved ones. Waiting just a few years can have a negative impact on several key areas of a life insurance policy.
Life Insurance: Can You Afford to Wait?
Critical decisions, such as buying a home, getting married or having children, require deliberate, thoughtful consideration. Indeed, the outcome of any one of these decisions can irrevocably change your life for better or worse. But, delaying the purchase of life insurance can be a costly mistake for you and your loved ones. Waiting just a few years can have a negative impact on several key areas of a life insurance policy.
Whole Life Insurance: Financial Protection Plus Cash Value Accumulation
In its simplest form, whole life insurance protects the people who depend on you for financial support — no matter what happens to you tomorrow. Aside from providing money to your beneficiaries to replace your income, whole life insurance also offers guaranteed cash value accumulation on a tax-deferred basis, as long as the policy remains in force. If available, cash value can be borrowed against to fund a child’s education, supplement your retirement income, or meet an emergency cash need. Remember, policy loans accrue interest at the current variable loan interest rate and reduce the total cash value and total death benefit by the amount of the outstanding loan and accrued loan interest.
The Effects of Waiting
Since a portion of the premiums paid accumulates cash value each year, over the long term, cash value accumulation can be considerable, especially since taxes on the growth are deferred. Generally speaking, the sooner you start paying policy premiums, the faster your cash value may accumulate.
A whole life policy is also eligible to receive dividends, if and when declared by the insurance issuer. Unlike cash values, dividends are not guaranteed and are subject to change by the insurer. In addition, past dividends are not indicative of future dividends. As a policyholder, you have several options for dividends usage. You can take dividend distributions in cash or apply dividends to add insurance coverage through the purchase of paid-up additional life insurance. Paid-up insurance is also eligible for dividends, has cash value and requires no additional premiums. So, waiting in this case can cost you the opportunity to increase the benefit paid to your beneficiaries.
Although you’re healthy now, you decide to delay purchasing whole life insurance for five years. In five years, you may suffer an unexpected health condition, which may place your insurability in jeopardy. In the worst-case scenario, if you were to die in the next five years, the cost of waiting would be the death benefit your beneficiaries would not receive.
Remember, purchasing life insurance is a major decision. So, it’s important to take the time to gather all the necessary information and choose the coverage that best suits your needs. While the decision is up to you, keep in mind that postponing your decision can prove to be costly.
For Additional information on this topic, or related to it, you can contact Mordechai Schachter at 718.915.3438 or mnschachter@ft.newyorklife.com.
Boruch
Isn’t term usually the better way to go?
Don-t Buy it!!
This ‘article’ is no more than a cheap sales-scam.
DON’T GET WHOLE LIFE INSURANCE.
Life insurance is important, even vital, yes you must cut a few corners (where possible) to at least get a basic policy. But rather save your money and get TERM life-insurance.
The proof is that every insurance broker will try and sell you whole life because they make better commissions. They make more money because you are losing out.
Also don’t bother with the small 100k whole policies they will try to sell you. If CHV“SH something happens this is pennies to support a family for many years.
Do yourself a favor and get term life today. A term life policy of 1.5 Million (enough to cover for a family of four) on the husband can be as low as $20 month. (Yes you need coverage your whole life, but at least get a 10-15 yer term today)
Hopefully you will never need it, but if Chv”s someone does, It’s the best investment they’ll ever find.
Moshe G
Why doesnt the poster write anything about the more simple term life insurance.
He writes that: “cash value accumulation can be considerable, especially since taxes on the growth are deferred. Generally speaking, the sooner you start paying policy premiums, the faster your cash value may accumulate.”
I believe that many younger readers with little or no significant income (newlyweds etc.) are not yet in the financial position to “accumulate cash value” particularly in tax-deferred accounts. Their rate of tax is likely to be higher when they seek to withdraw the funds than when they initially invest it.
Granted, providing my loved ones the security of a life insurance policy and investing in our future may both be good ideas, but is it really the right move to combine both goals in a whole life insurance policy?
I USED HIM -HE WAS GREAT!
Mordy is a really great and honest guy to work with. I personally got a whole life insurance plan through him, as well as a cheaper plan for my wife, and we are very happy. He understood our budget and what we needed, and he was very helpful to us in every way he could.
Yankie
e.w. toronto
Hey Mordy!
against the Rebbe
having children is a decision???
the Rebbe fought against family planing, there are many many sichos about this topic.
shame on ch.info for posting such words even if it isn’t the main topic of the article!
Sam the Internet Troll
You know who it is … nice job …
happy I bought a term policy
I agree with the person who suggested term insurance. I have a 15-yr term policy, I’m in my mid-fifties, and I sleep better knowing that my family will have something to live on if ch’v I pass away before our children are all settled in their own families, with their own parnasa. BTW, weight makes a huge difference in the premium you will be charged – even ten pounds translates (acutarially-speaking) into a significantly shorter life expectancy.
Mordechai Schachter
Mordechai Schachter here. The article adddresses the importance of getting insurance earlier rather than later. As far as whole life goes, it is ceratinly true that it doesn’t always make sense in every situation – however that should be determined on a case by case basis instead of being discredited in absolute terms. Term is also a solution (the most affordable way to get coverage initially) and I”YH, I’ll write about that later.
Get a life....insurance policy
Term seems like the way to go.
However having recently bought a policy for me and my wife, I can tell you that the previous commenter was misleading.
I took a 1 million dollar policy for me and my wife. I have nearly perfect health (the 2nd best category – which isn’t the typical. the usual is 1 below me) and still I pay about 43 for just myself.(I pay about 20 for my wife)
Still a great price, but not quite $20.00 as the commentator wrote. (this was for a ten yr policy – which is normally the cheapest.
I purchased it Through Met life.
All in all, I pay about 64. I feel it’s the right thing to do when you have a wife and kids. As far as I know this isn’t considered family planning, and I don’t think the Rebbe was explicitly against it. At least that’s what I’ve been told.
Moshe G
@ “Against the Rebbe”
The reality is that children are not born by accident…..
Nobody
Whole or Variable life insurance is a very bad investment. First, the insurance is really a term insurance combined with a tax differed investment. The term insurance component is always overpriced compared to what you can buy on the market, and you have little to no control over the investment. However, the worst part is that C“V your family needs that insurance before you have invested enough to exceed the life insurance on the policy, you lose all of the investment, and after you accumulate all of the value of the insurance, you don’t have insurance anymore, just a tax differed investment.
There are rich people for whom some of this makes sense for tax reasons, but if you are not one of those rich people, buy term life insurance at a good price and put the extra money in an IRA or other tax differed investment. Then if your family needs the insurance C”V they get the insurance *plus* whatever you accumulated in the IRA until then, and when your IRA exceeds the amount of insurance you need, you can drop the insurance. It costs you the same amount of money, and you come out way ahead financially.
Whole vs. Term
Sure term insurance is cheaper, but it runs out. And when it does, the next term is more expensive. In the long run, between the investment component of whole insurance and the more expensive FUTURE term insurance, whole insurance is better, So, if you could afford the higher premiums – and yes, for many people that may be a luxury – then permanent insurance is the better option.
Aaron Vogel
I have life insurance for myself and my wife and got it from Mordy Schachter. He came highly recommended by a family member and I have and will recommend him to my friends and family.
He went over all the options with me and was very kind, informative and understanding of budget. I have term and can convert to whole if I wish to.
Either way it is the right thing to do.