Unfortunately all life insurance advisors are not equal in their knowledge and that can be dangerous for any consumer seeking information from a professional. A young woman came to a discussion group on retirement preparedness. She was so jaded because of some information she had gotten from an insurance representative. The young woman told her story of which we will retell here in this article. However, all things being equal, since we don’t have the representative’s side of the story we will simply present the information given by her and offer the best solution we know.
The young lady was in the market for life insurance. She really didn’t have an understanding of term versus whole life insurance which is nothing unusual. This is a synopsis of her story:
” I went to an insurance guy my family had known for a number of years in order to make certain I had the kind of life insurance needed to take care of things in the event of a disaster. He told me never to purchase any form of whole life insurance, but that term life insurance was what I needed. I didn’t have a family of my own at the time. I was 25 years if age and really wanted to get started planning my future. The representative told me that I would have to pay for whole life insurance for the whole of my life and that term life insurance was for a term and that was what I needed. He also told me that life insurance was temporary and I should not think of life insurance as something to have long term. I was told that life insurance’s only purpose is to be replaced by savings. After my mother passed away using the same strategy as the representative had told me to use, mother did not have the resources to take care of her burial. Her savings did not replace what she thought a life insurance policy was intended to do.”
Our response to the young woman is that she perhaps did not ask the right questions or the opinion was simply that of the representative. Some of his points were well taken, but the most significant aspect that was left out of the conversation is – Why do you need insurance and what do you want it for? Many people assume life insurance is purchased for the purpose of burying your loved ones and most often it is. However, for many insurance is an investment or a tool used for collateral, depending on the type of insurance – a potential supplement to income.
It is so important to do your homework so that you can participate fully in unlocking what you need for your future. Surely she was young enough to have exercised many options when it comes to the purchase of life insurance.
P.S. Always Remember to Share What You Know.