There are a number of often conflicting issues to consider when determining the best life insurance product for any specific client. When I sit down with a client I generally break my client review session into 4 separate issues to consider before making a determination about what to recommend.
My first inquiry is, how long is the insurance coverage needed? If the client needs the coverage for a limited period of time that concludes well before the clients life expectancy, then a basic term insurance policy is likely the ideal solution. Some short term needs could be to protect the outstanding balance of a mortgage, protecting an education fund or funding a business buy/sell agreement.
If I can determine that, after the short term need has expired, the client may still have a future need for permanent insurance, then a convertible term policy would be an ideal recommendation. With such a policy, the client can convert the term policy at the end of the term to a whole life policy without the need for additional medical screening and underwriting. The benefit in this case being that if at some point in the term, the client becomes ill or otherwise medically uninsurable, it would not affect their ability to have coverage for life.
The next factor I consider is affordability. If price is a current concern then generally I look to a longer term policy or a term to 100 (infinity term) policy. The disadvantage of a standard term policy is that as time passes, the premiums become prohibitively expensive. At a point it becomes impossible to afford for most clients. If the term policy does come with a convertibility option, then conversion to a term to 100 becomes the best option. The term to 100 product, while slightly more expensive than a standard term policy, is still a sort of permanent option that offers a level premium for life.
The next issue for serious consideration is whether the client has a level or increasing need for coverage. If the coverage amount needed is most likely to stay the same forever then any type of insurance will do, subject to the factors previously noted. However if the need is likely to increase as time passes (Tax liability at death on an RRSP, or capital asset) then some sort of growth (indexed, whole life or universal life) policy may best serve the clients needs. At any rate, a policy with a guaranteed insurability option may be ideal. This simply means the policy owner can buy additional coverage without underwriting, subject to certain restrictions.
Finally, an important issue that many client’s must consider is their ability to pay premiums for life. If a client does not desire to pay premiums for the rest of their life, then some form of whole life or universal life policy is their best bet. In either of those policies the client has the option to use the policy cash values after an adequate amount has been accumulated to pay the policy premiums/costs on the clients behalf.
Ultimately it is always a good idea to sit with a licensed insurance representative to determine the “best” coverage for your specific needs. Get in touch with me directly and I will guide you through the process.