Guido D. Aloisi
Missouri Life Insurance
There are many forms of Missouri life insurance, enough to make the choice very difficult if you are not familiar with the products. Some of the terminology and the assortment of benefits can be overwhelming. In any market, but especially in the senior market, it is important that you are aware of the type of coverage you have, or are about to purchase. So let me give you a brief overview.
Term Insurance
It all starts with term insurance. Simple, covers you for a certain time (10-20-30 years) whichever you choose, has no other value to it (only the death benefit), and it is the cheapest in cost.
Senior Perspective on this product:
- Good and inexpensive if young, very expensive over age 55.
- Most companies will not issue 20 or 30 year coverage after 50.
- 86% of all term coverage expires, prior to insured’s death.
- It is like renting a home, no equity value in it of any kind.
- You have no guarantee that it will be there when you need it.
Universal Life
This product basically has a buy term and invest the difference makeup. You are charged the term cost each year for the coverage (cost goes up each year), and the balance of the premium you pay is invested. You may choose an assortment of investment avenues tied to stock market performance, etc. The objective with this type of contract is that it will grow in value on the investment side, and be able to contribute to the cost of insurance in the later years. Additional money can be deposited into the contract as an investment.
Senior Perspective on this product:
- If investments do not perform, will not be able to sustain premium.
- Contracts are based on projected values, not real time values.
- May in later years have to put more money in to keep the coverage.
- Limited control with this product, because of the risk factor.
- If investments don’t do well, may not have the time left to recoup.
Whole Life
The industry refers to this product as "Permanent Insurance". Unlike term, and universal life, the core makeup has no term to it. The coverage is permanent, for your whole life. The premium is set when you purchase it (by age), and will remain the same. The premium can be paid ongoing, or as a single deposit. There is no stock market connection, or risk attached to this product. It will never pay less than the face amount to your beneficiary, it cannot go down in value.
Senior Perspective on this product:
- Permanent coverage, never ends, it is for your whole life.
- Premium never goes up, stays constant.
- No market risk of performance, so coverage stays in force.
- Has equity in it, cash value, loan value, and grows tax free.
- Funds available for long term care, nursing home, terminal illness.
Overview
It is not a secret that insurance companies know very closely how many people of a certain age will die this year. The mortality records and research they do make this possible. They just can’t tell us who; I guess that’s not for us to know. The premiums that are charged for coverage are based on these records. Makes sense that fewer people age 20 will die this year, compared to people age 65, therefore the cost of a $100,000 insurance policy is less if purchased younger rather than older. This is true in any form of life insurance.
The magic of it all
The senior perspective is that we know we are closer to the end of this magnificent journey, we know without a doubt that we now have the last opportunity to make things happen for our loved ones. It’s our chance to take advantage of the magic of life insurance. No other product can do what life insurance does; it can make security, retirement, and college, a reality. It can make the challenges for our children and grandchildren a little easier, but most importantly only you can make the decision for it all to happen.