The firm of Steven H. Kobrin, LUTCF
In 1991, I entered the life insurance business full-time, and soon formed my own national brokerage. Throughout my career, I have been dedicated to mastering the craft of selling life insurance, and am an expert in helping people get a policy who represent a “higher risk” due to health, lifestyle, or other personal issues. Along the way, I have developed a huge network of industry contacts that enables me to serve as a primary resource for all the insurance needs of my individual and corporate clients.
I now help brokers, advisers, and financial firms across the country utilize my organization and become a primary resource for the insurance needs of their own clients. They form strategic partnerships with my providers so they can stay within their own area of specialization, yet help their clients purchase the other products they need from professionals in those marketplaces. It's a winning formula for all concerned.
I run a linked in group about these strategic partnerships:
On the personal side, I am a religious Jew and avid practitioner of kung fu. I have studied spiritual disciplines and personal development all my adult life. I am a conservative in my political and economic views, and a liberal when it comes to keeping an open mind and a willingness to work with people of all persuasions.
BA in Liberal Arts
I am licensed to sell life insurance in every state except Alaska and Hawaii.
The bottom line here is after-tax income. I am sure you know that life insurance can provide tax-deferred cash accumulation, and tax-free distributions, if the policy is properly managed. But also bear in mind that the product is primarily designed to provide a survivor benefit with hugely discounted dollars. It therefore has expenses and charges related to insuring you, sales administration, etc.
The big question is this: are all these costs related to life insurance less than the total cost you would be paying on a non-insurance investment? Those products incur taxes, sales charges, etc.
Do an apples-to-apples comparison. Design a scenario in which you are putting the same amount of money into each type of product. The one that nets you more on an after-tax basis would be the winner.
Cash taken out of a life insurance policy is taxed if it is above your cost basis. The quickest way for you get to get an answer is to call the insurance company and have them calculate the cost basis. That will tell you what portion of the distribution would be taxable, if any. You can ask them to do so this calculation for both scenarios: paying off the loan, and not paying off the loan.
If you think there is a possibility you will need life insurance for more than 20 years, then you should buy the 30-year term. You will probably spend less money overall doing that, than buying a 20 -ear term now, and then a 10-year term when that one renews at a higher price. Plus, you may not even qualify for a new policy at that point.
It could be a good idea if you want to have a guaranteed portion of your financial portfolio. Whole life insurance gives just about the best guarantees out there. Of course, you have to understand how the policy works in terms of liquidity, taxation, and so on. But if it passes muster, I can't think of a better way to guarantee the growth of some of your money. So this is a discussion you need to have with your investment advisor.
Another concern would be the reliability of your life insurance coverage. What happens if you leave your current employer? Can you take that universal life policy with you? If not, then you will lose coverage. If so, do you have to medically qualify to keep it? What happens if you have medical issues and can't qualify for a new policy? This is a discussion you need to have with your insurance advisor.
So, it's not a question of what type of product, but of the benefits and features of the product and how they fit into your own personal preference and plans.
I think it can be a fantastic decision. Life insurance is a superb way to leave a legacy of caring for someone you love and support. It's a financial product for which each dollar of benefit literally costs pennies. I can't think of a better way to leverage a small amount of money in premium into a substantial gift for someone who deserves a break.
Consider a niece or nephew, maybe a younger cousin. Make them the beneficiary and set up a trust to help them use the money wisely. Or select a charity that provides for children. When your time on this earth is over, they will be paid a bunch of money that could enable them to do great things. Include with the policy a testamentary letter describing your hopes and dreams and expectations for them. Give them something to live up to. This direction, plus the financing, could set them on a great path in life.