When Permanent Insurance makes sense

As the children get older and move out on their own, and your mortgage and other debts are nearly paid off, the need for life insurance capital to replace income for dependents decreases.

You May Still Need Some Life Insurance

It may be time to consider converting your term insurance to a permanent one that can provide ongoing coverage if you “outlive” your term insurance. Make sure that your term insurance doesn’t expire before you do.

Permanent insurance can do one or more of the following:

• Provide cash to equalize an inheritance
• Provide cash for a surviving spouse
• Preserve your estate
• Pay for final expenses
• In some cases, you can access your cash from permanent life insurance policies that allow accessible funds to grow within the plan.

Mitigate increasing Term Rates. Since Term policies have premiums based on age, they become increasingly expensive over time. Verify your policies’ renewal rates and determine the cost at each renewal period. It may also be prudent to verify if your term policy has the option to convert to a permanent plan with a permanent death benefit that will not cease coverage.

Conversion Needs No Medical Underwriting The advantage of converting a term plan is that no medical underwriting is necessary, meaning you don’t have to qualify to be in good health. Some people keep a portion of the convertible term while combining permanent coverage that lasts a lifetime.

What You Should Review If you are considering making a conversion and are in your fifties, this might be a good time to call your insurance specialist.

At the same time, examine:

• All of your estate planning needs, especially if you own a second residence, cottage or own a business that has grown — essentially understand your potential capital gains taxation on your estate;
• Assess all life insurance policies and the risks that they cover and the risks that they do not cover (e.g. a life insurance policy for a personally owned company may be an entirely separate risk coverage which may not include a spouse);
• Assess your last will and any trust that you have set up;
• Figure out if your spouse has enough to live on if you should die: assess all bank accounts, retirement investment accounts, and properties owned;
• Health-wise, make sure you have a medical power of attorney or durable power of attorney;
• Confirm you have your beneficiaries up to date, and work with your partner to understand the full scope of your risk.