People in the real estate business understand investment strategies. They understand return on investment, and they understand running a small business since that is how they are operating. The challenge that most realtors have to deal with, however, is insurance strategies that deliver a return on investment. Term life insurance can be an important part of their strategy.
We certainly understand that not all real estate professionals are the same. In fact, the difference between a struggling realtor and a highly successful one is remarkable and yet, most have commonalities that place life insurance on the back burner.
- Many, if not most, feel they can work and produce forever. This thought process makes it difficult to discuss the result of an unexpected death or disability.
- Many real estate professionals spend very little effort planning past the next twelve months for themselves and their families.
- Most are more concerned about survival in a down market rather than retirement planning and risk mitigation.
These points are not meant to be negative or disparaging, they are meant to reveal the financial risks that all business professionals have and how to mitigate them with affordable term life insurance. Although real estate professionals conduct business differently than other professionals, their risks are very similar.
Affordable Risk Mitigation
The best method for handling inherent risks during the lifetime of any professional is to mitigate the risks by transferring them to an insurance company. This is true for your car, your home, your health, and your ability to earn, and the most affordable product to use is Term Life Insurance. Term insurance typically costs about a third of what permanent insurance costs. It is the perfect vehicle for overcoming financial problems that arise when an income earner dies unexpectedly.
Isn’t Term Insurance Temporary?
Yes and no. Term Life insurance is purchased in blocks of time (the term) which is usually 10, 20, or 30 year periods. Most insurers will offer a renewal at the end of the term, but at a price based on your new attained age. Whether or not you should renew the policy should be based on several factors when the renewal is offered.
- Do you still need that amount of insurance? After twenty or thirty years of working hard and paying down your debt, it’s unlikely that you will require the same amount of coverage.
- Can you realistically afford the renewal premium? The price of term insurance (or any insurance) at 30 years old is much less than the price at 50 or 60 years old.
- Is there a conversion option available? Most term policies have a conversion option that allows the policyholder to convert a portion or all of their temporary term insurance to permanent insurance such as whole life or universal life. Your premium is likely to be higher, but you do not have to deal with medical questions or exams.
So, depending on your circumstances, even when term life insurance is considered temporary, it can be converted to permanent insurance.
Are There Any Living Benefits?
Yes, most term lfe insurance policies have living benefits if various riders are added to the policy at the time of purchase.
- Most term policies come with the accelerated death benefit or it can be added as a rider. This rider allows the insurer to pay a percentage of your death benefit to you if you are diagnosed with a terminal illness. This benefit allows you to deal with the expenses of a terminal illness while you are alive and then the balance of the death benefit will be paid to your beneficiary.
- A return of premium rider is available from many insurers for an additional premium. If at the end of your policy’s term and you are still alive, your insurer will return all premiums paid on the policy in a lump-sum tax-free payment. If you have other permanent insurance at the time of your payment, it makes very good financial sense to invest the returned premium in a retirement product so the money continues to work for you.
What If I Need More Insurance Later In Life?
When you purchase insurance as a young adult, you can expect to need more life insurance because of various life events such as marriage, children, mortgage protection, and college tuition. By purchasing the guaranteed insurability rider, you have the option of purchasing additional insurance at regular intervals. Although the additional coverage will be priced on your new attained age, you do not have to answer medical questions or undergo a medical exam. You can purchase the additional insurance even if you have a terminal illness.
Can I Cover All My Family Under One Policy?
Absolutely. Most insurers will allow you to add your spouse to your policy as an additional insured for an amount of coverage up to the amount of your coverage. Your spouse will also enjoy the benefits from the same riders you opted to purchase for yourself.
You can also purchase the child term rider to cover all of your children you currently have and any that might be born in the future. The child term rider is purchased in units of coverage of $1,000 or $2,000 and most insurers will allow you to purchase $10,000 or $15,000 which should be enough to cover the cost of a funeral.
What Is the Best Strategy for a Real Estate Professional?
The best strategy when considering term insurance for your lifetime is to follow these easy steps:
- Use a special online calculator that will help you determine how much insurance you should consider purchasing or contact an independent agent for help.
- Contact an experienced Realtor Life Insurance agent to discuss the estimated pricing for the amount of insurance you have determined is appropriate.
- Speak with the agent about each rider previously discussed so that you can deal with expected life events that are likely to change your needs.
- Your agent will then shop your insurance needs with multiple insurance companies and deliver the best value for your coverage and your budget.
- Your agent will then gather the information needed to complete the application and submit it to the company you’ve chosen. Your agent will also schedule any medical underwriting requirements and schedule to contact you annually to review your coverage and make any necessary changes to your coverage.
Remember, the insurance professional you choose to do business with is paid by the insurer and not by you. He or she will establish a fiduciary relationship with you so that you can depend on him or her to put your needs ahead of any others and to make sure your financial risks are properly mitigated.
For more information and details about Term Life Insurance forRealtors, please call (800)712-8519 to speak with an experienced agent or contact us for a free and confidential quote.