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Is Your Old Life Insurance Policy An Outdated Brick Phone?

By Jeff Ditsworth, CLU, ChFC, Sales Vice President, North American Company for Life and Health Insurance


 

Did you ever carry a brick cell phone around, perhaps in its stylish leather bag? Believe it or not, these retro brick phones are still sold online (in case you want to turn some heads and get a few laughs). Technology has evolved in the cell phone industry from brick phones to smart phones. We've gone from "comes with its own carrying bag" to " fits in your pocket."  "Weighs only 3 pounds," to "weighs 4 ounces."  "Stores 99 phone numbers," to "stores 20 full length movies." The technological improvements in cell phones are similar to those in life insurance policies.  While it's not necessary to "upgrade" your life insurance every year or two, it's important to understand that the products and market conditions have evolved in 3 main ways drastically over the last 30 years. Life insurance is a financial asset, and like all financial assets, needs to be reviewed. Here's what to look for in your policies: 

 

1)  Fees and expenses mainly from what's knows as the "cost of insurance" may have decreased due to advancements in medical technology which has increased how long we live. Many life insurance policies written up until just a few years ago were based on mortality tables and medical assumptions from 1980. There are numerous medical conditions that even 10 years ago were assessed additional expenses such as high cholesterol, high blood pressure, and diabetes. Medical advancements have led to better treatment of these conditions, which increases how long we live. A decade ago, for example, someone with controlled hypertension may have faced an additional 150% to 200% cost of insurance, where today they may not.  

 

2)  Market conditions have changed drastically in the last 30 years. Think about interest rates. Many of these older life insurance policies were written when interest rates were much higher. Now that they are significantly lower, there may not be enough cash value in the policy to support the fees and expenses as once assumed. Additionally, many policies did not offer the guarantees on the payments or insurance amount that are offered today. Don't wait too long to have your life insurance reviewed - for many that threw their policy in a drawer, set it and forget it, it may be too late.  

 

3)  New product features have been a game changer for people purchasing life insurance. There have been dozens of positive features and benefits introduced in the past 10 years. In the past, there was only one way to access a life insurance death benefit, and that method may not overly attractive to most people. Today, life insurance companies have developed living benefit features that allow their policyowners to access a significant portion of insurance under certain conditions. When Americans are surveyed, usually a key concern about retirement is how to pay for healthcare expenses in retirement. These new features could be a significant cornerstone to someone's financial plan.  

 

Now is the time to consult a reputable financial professional to review your life insurance. You may find better pricing, new features, and in many cases significantly better guarantees built into the policy. When we review older life insurance policies, we often find opportunities for people to either obtain larger amounts of life insurance coverage for the same cost of premium, the ability to obtain the same amount of coverage and stop or reduce their payments, or the opportunity to upgrade their insurance to obtain these living benefits and additional features.  Once reviewed, you may find that for your situation, your insurance is perfectly positioned, in that case, wouldn't that make you more confident? It's also a best practice to regularly review your beneficiaries. Left unchecked, these can often lead to ex-spouses or even deceased individuals named as the beneficiary. Wouldn't it be unfortunate if your benefits paid out to someone other than who you intended?  People purchase life insurance when they love someone, have it reviewed to make sure it will be there for them when it's needed.

 

So... when it comes to your life insurance policy, are you carrying the outdated brick phone, or the new smart phone? Review your policy with a financial professional today! 

 

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A Great Week for Retirement Planning

 

A Great Week for Retirement Planning

 

This week is National Retirement Planning Week. If it wasn’t on your calendar, fear not: you can still use this week to focus on retirement-oriented financial planning. Saving for retirement is one of the wisest moves you can make to enhance your family’s financial stability not just for today, but for tomorrow. If you’ve just filed your taxes and are expecting a refund, consider how you might use that money toward your retirement goals! It’s time to get your retirement planning hat on for National Retirement Planning Week!

 

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For 130 Years, We’ve Been There For You

 

North American celebrates its 130th anniversary this year. Founded in 1886, North American has always stood for financial stability and protecting families. We’ve also been a proud leader in bringing innovation to the life insurance industry: in 1918, for example, we became the first insurance company to offer a disability coverage policy for women.

 

We’ve helped our clients through two world wars, the Great Depression and multiple recessions. Because we’re not publicly owned, we don’t need to manage our business to meet quarterly profit estimates; instead, we focus on the long term – just like our clients do. Our strong reputation and industry ratings are a testament to the hard work of our dedicated employees.

 

We know that people depend on us for their financial stability – and to be there for them when it counts. We’ve done it for 130 years, and we remain committed to being there for you when you need us in the future.

 

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Helping Families When They Need It Most

 

Most people think about life insurance as a prudent part of financial planning, an obligation to one's dependents in case we die. But it's more than that. The death of a loved one is extremely difficult for a family, regardless of the circumstances. And the stress they suffer would be much worse if accompanied by financial devastation. Death benefits provide financial security to one's loved ones. They represent a promise that is kept even after death: to maintain a roof over heard, to fund an education, to provide a high quality of life in one's golden years. North American paid out more than $380 million in life insurance death benefits to designated beneficiaries in 2015. We're proud to play a part in helping families cope with the death of a loved one, and to provide the financial protection that they deserve -- now more than ever.

 

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Insurance Considerations for First-Time Home Buyers

 

For most people, buying a home is one of the biggest financial commitments they will undertake. With tens of thousands of dollars at stake, you want to make sure not only that you are financially prepared for that purchase but that you are prepared to protect that investment. Fortunately, there are several ways to make sure that you aren’t putting your money—and home—at risk.

 

Homeowners Insurance

It should go without saying that you are factoring in the cost of homeowners insurance into your finances when buying a home. And while homeowners insurance might not technically be mandatory, you probably won’t find a lender to finance a mortgage without it. And even without mortgage requirements, do you really want to risk having to replace a $100K-plus home out of pocket in the event of a disaster? The point is that you need to factor in the cost of homeowners insurance into your financial projection—and understand what kind of coverage is appropriate for your purchase. A single-family home, for instance, needs a different kind of coverage than a condominium unit.

 

Flood Insurance

You might think that damage from a bona fide natural flood is covered by your home insurance policy. With most homeowner policies, that isn’t the case. And if your desired property lies within a designated flood plain, your mortgage lender will require it as a condition of approval. In these instances, you specifically need to purchase flood insurance, which is available primarily through the government’s National Flood Insurance Program. By the way, you have the option to purchase flood insurance even if you don’t live within a flood plain—and in those cases, it’s cheaper to buy. And approximately a quarter of flood claims are on properties that aren’t in a designated flood plain. So it’s something to consider.

 

Appliance Insurance/Home Warranty

You also might think that a homeowners policy would cover the cost of replacing a major appliance in your household should it break down. The truth is that while your homeowner policy may cover any losses incurred by natural hazards or theft, it won’t cover the cost of repairing or replacing a faulty appliance. And if you’ve ever priced a furnace, that cost can be considerable. Appliance insurance (or a home warranty plan) can help defray that cost. Be sure to understand the terms and conditions, however, before purchasing any plan.

 

Term Life Insurance

Once you actually have a mortgage obligation, it’s important to ensure that your loved ones are protected in the event of a personal catastrophe. One way to accomplish this is to purchase a term life policy for the amount and term of the mortgage. For instance, if you have a 15-year mortgage loan of $200,000, you could purchase a reasonably priced 15-year term life policy in that amount. If anything were to happen to you or your spouse, you could at least pay off the loan and not have to worry about losing your home on top of everything else.

 

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