Term life insurance makes up a significant part of our practice. For the vast majority of clients, term life insurance is the best life insurance solution. It is rare that we ever use a permanent life insurance solution and when we do it is usually in a special needs child situation, and only if the advisor is in agreement that a permanent solution is in the best interest of the client.
In most situations, we recommend guaranteed level term insurance with a guarantee period of either 10, 15, 20, 25, or 30 years.
Insurance needs change over time and the need for life insurance, in particular, typically decreases over time as clients become financially free or self-sufficient. As a result, it is common for us to “ladder” policies to give clients the best value for their premium dollars over time.
For example, if a client has a need for $3 million of term life insurance today, he may only need $1 million of the $3 million for the next 25 or 30 years. As a result, in situations such as this, it is common for us to recommend the purchase of $2 million of 20-year level term and $1 million of 30-year level term, rather than $3 million of 30-year level term so that the client is only paying for $1 million of life insurance between years 21 and 30, rather than $3 million.