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Oh, hello again. And good evening. It’s a nice night out isn’t it. The kids are asleep. You managed to not get food all over your dress clothes during dinner. Got a nice cup of cold milk in the glass. And once again it’s time to sit back, relax, and talk about insurance. I’m Rudy Lurz. And this is Insurance After Dark: Episode 2. Tonight’s topic is life insurance. And we’ll talk about the differences between whole and term life.
Life. To me, that takes on a whole new meaning in the context of insurance. I look at life insurance a lot like the folks who built the cathedrals in the Middle Ages. You see, when those architects, engineers, stone masons…when they set about the task of completing those cathedrals, they knew that they would never live to see that cathedral completed. But they built anyway. Out of love, out of faith, out of a sense of duty. So, much like those cathedral builders of old, when you buy life insurance, you are doing it to protect your family’s legacy and to protect them and provide for them when you are no longer there. And to me, that’s one of the most noble and necessary things that you can do for your family in these uncertain times. Protect them against the contingency that you’re gone. You’ll never see the benefit, but your family will appreciate it and honor that sacrifice that you made. And if you do it with the right insurance company, it does not have to be a sacrifice on the level of those cathedral builders. You can do so for a very low, set amount each month. And that small amount will protect them in the event you are no longer there.
So let’s talk first about whole life. Whole life provides a set death benefit that is guaranteed to be paid to your beneficiary no matter when you pass away. I look at it as primarily a great product for those who are older: approaching or past retirement age. Or for the folks who are really really young, starting at 2 weeks, or a month old. It’s a great product for those two groups. Let’s start off with those who are older. If you’re older, and you don’t have any life insurance, you don’t want to burden your loved ones with all the expenses of a funeral and with uh, any end of life expenses. Such as your debts, paying the probate attorneys; if you have a complicated estate that fee might be higher. Uh, and, of course your funeral, your casket, your burial plot, all those things cost money. Average end of life expect-err…end of life expenses are between ten and thirty thousand dollars, which are also some of the most common forms of whole life insurance. Many of those whole life policies are within that…within that (pause)set range. So when you’re older, your premiums are also going to be higher for those policies. Because…death is coming, that death benefit will have to be paid; it’s guaranteed. Your premiums will be higher as well.
Which brings us to juvenile whole life insurance. To me, this is one of the best life insurance products that you can buy. If you have children, and you don’t have a juvenile life insurance policy, juvenile whole life insurance, you should get that…yesterday. Because these cost pennies a day. Most often under $10.00 a month. And they build cash value over time. Which can be borrowed against, and can be cashed out, when, most often, your child reaches age 18 or 25. So, the “borrow against” is a great option for college, for surprise debts, for surprise bills…I received a scholarship to the University of Mannheim to study in Germany, and my parents had a juvenile life insurance policy for me. So when I got that scholarship, it did not cover air fare, it did not cover boarding, and the apartment in Germany. So they borrowed against my life insurance policy. They paid it back. And when I was 25 I chose to convert it to a whole life insurance policy of my own. So if you buy a [$10,000] juvenile life policy for someone who is, say…2-years-old. You’ll be paying about $6.75 a month, which builds cash value over time. At 18, with my company’s whole life insurance policy for juveniles, that [death benefit] amount doubles, with no change in premium. And your child has the choice to cash it out, which is a nice “welcome to real life, welcome to adulthood starter pack” of a few thousand dollars, or convert it to whole life of her own, in which case, when she’s older, she won’t be paying those very high premiums for a whole life policy, she’ll have it. She could pay into that for decades and never hit that death benefit amount. So. whole life, great policy for the very young, if you’re a parent and don’t have one, talk to me, it’s a very important product to get.
Term life! Term life is…it has a different purpose. It has a set limit, normally ten, twenty, or thirty years. Meaning, if you outlive it, you don’t have any benefits. Likewise, the premiums are lower, because it’s limited in time, and the benefits are higher, because it’s likely if you buy it when you are younger, that you’ll outlive the policy. The older you are when you buy term life, the more expensive it will be, just like whole life. So if you are 33-years-old, let’s say. And buy a 10-year term life policy. Chances are you’ll live to see 43, so your premiums will be pretty low. But the benefits will be high. The purpose of term life is salary replacement, and protecting your income in case you’re not there. So if you were gone in four weeks, how would your family deal with the expenses that it has? How would they deal with the mortgage? How would they deal with college expenses? How would they deal with the cost of raising children. They need you and they need your highest-earning years. That’s what term life is designed to protect. It’s a very inexpensive product that protects your highest-earning years in the event that you’re gone. So you want to, optimally, get term life to cover through your mid-to-late 50s at the very least, so if you’re gone in that time, you’ll have, your family will have, a salary replacement for what is also gone with you, and that’s your income. So, at least, at the very least, 1-3 years of your salary is what you need for term life, because your family will be using that during a very, very difficult time. They’ll be grieving your loss, and they’ll also be grieving the fact that expenses will mount, and they’ll need that money to pay the bills. So that’s the purpose of term life: salary protection.
A lot of folks say, “Well, I don’t want to get term life, because I don’t want to feel-I don’t want to pay twenty years worth of premiums and then have no benefits at the end of that.” Well, your family will appreciate it. Because in my mind, it’s a win-win scenario. Yes, you pay 20 years of premiums and you don’t receive the benefit. But your family had you and they had your highest-earning years. So…and you protected them in case they didn’t. So to me that’s a selfless act, that’s a necessary act, and that’s a very affordable act you can take, because to not have it is a lot worse than it is to have it and not need it. (wry smile) I messed that line up last week, in case you were paying attention to last week’s episode. So, in short, life insurance whether you go with a whole life or term life policy is something that your family needs to protect your loss, because it’s painful enough to lose a loved one, it’s even more painful when the loss of that loved one also means that you’re in financial distress.
Life insurance is an affordable policy that you can provide your family, that while you won’t see the benefit of it, it’s an act of love for them. And it’s one that is, I think, one of the best things you can do for them. As always, my name is Rudy Lurz, if you’d like to talk to me more about any of these ideas, if you’d like to get one of these products of your own, you can text or call me at (540)520-3069. That’s (540)520-3069, or send me an email at Rudolph_Lurz@us.aflac.com .I even have one of my business cards here so you can see it for yourself (shows closeup of business card to camera). That’s (540)520-3069. And stay tuned for next week’s episode of insurance after dark which will talk about the need for catastrophic coverage, and the different policies available for that. Stay classy out there, and take care of each other.
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