Kim C. Christensen                                                              
 
Certified Financial Planner    
Registered Investment Adviser        
Registered Investment Advisor
Life Insurance
Life insurance is a critical need for families, business owners, and individuals who have someone depending on them for income, for someone they love, or someone they owe money.

Figuring out how much life insurance you will need for your situation is part of putting together a comprehensive financial plan, and some life insurance education is in order.  Life insurance needs analysis can also be done on a stand-alone basis, and any good life insurance agent should be able to help you determine what is needed.  The challenge is finding a good agent.

However, choosing the right product is not so easy.  The life insurance industry is a mine-field of products and providers that you would be well-advised to learn about before making a major purchase decision.  There are so many products, many of which are very complex.  They also have a wide range of premium prices, depending on whether they are term or permanent insurance, your health, the company, and the person selling the policy.  Life insurance rip offs are common, especially for permanent products.  Life insurance agents like to sell life insurance because most of the time it pays large commissions, and the more they get you to spend, the more they make.  Commissions run anywhere from about 3.5% to over 100% of the first year premium.  Unless you know what you are looking for, and where to find it, you are most likely going to wind up buying a product that will pay the agent 50% or more, so it pays to be knowledgeable, or work with someone who is knowledgeable (like me) and who will teach you how it all works.

Many advisers recommend only buying term insurance and investing the money you would save had you bought permanent insurance.  It is not so simple however, as you have no way of knowing how your life might change, and how long you are really going to need the insurance.  If you make the wrong decision and have to buy more coverage 20 to 30 years down the road, the term insurance that seemed like such a smart decision at the time could wind up being very costly.  Building in flexibility for changing circumstances is a good idea.

There is a wide variety of permanent life insurance - whole life, universal life, variable universal life, etc.  If you have a need for permanent insurance, you want to make sure that it is institutionally priced.  These are the products normally bought by companies for executives, and go by other names such as blended policies, low target premium universal life, COLI (corporate owned life insurance), and BOLI (bank owned life insurance) to name a few.  Large companies are not going to spend a lot of money on life insurance paying commissions to agents.  The agents who sell these policies make their money by the large volumes that they sell.  The good thing for you to know is that these kinds of policies are available to you too, if you know which companies offer them, agents that are educated in their use, and agents who are willing to sell them.  These kinds of agents are rare.  The companies that provide these kinds of policies are also very limited, but they are available.  Getting this kind of policy is the best way to avoid a permanent life insurance rip off.

Many advisers also recommend buying "no-load" insurance from a company that has no agents and pays no commissions.  My research has indicated that there are many cases where you can find a commission-based product from better rated companies for lower premiums.  When it comes to getting a better product for less outlay, I do not think an agent getting a commission is such a bad thing, especially if they earned it by giving you good advice.

Be aware that "low-load" products are still commission based products.  All agents are paid the same if they sell the same product from the same company, by law, and no agent or company has an advantage over any other, no matter how they advertise their products or services.

It is beyond the scope of this page to delve into all the intricacies of good life insurance planning.  If you have questions, call me.
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