Evaluating Life Insurance Needs

Because life insurance typically becomes more expensive as we age, many people may believe they can’t afford to purchase coverage later in life. However, considering that life insurance is significantly less expensive today than it was a decade ago, you might be able to purchase new coverage and pay premiums comparable to those that were available when you were 10 years younger.¹

It’s a good idea to review your life insurance situation on a regular basis. Here are some reasons why your coverage may need to evolve to keep pace with your life.

Life Changes

If your income and/or net worth have increased significantly since you purchased your policy, ask yourself whether your current coverage would enable your survivors to maintain their current standard of living. Major life events such as birth, marriage, death, and divorce may also affect the amount of coverage you need.

Inflation

Because of inflation, a policy purchased years ago may no longer offer the same level of protection. For example, a 3% inflation rate can cut the purchasing power of a death benefit in half in about 24 years, based on the Rule of 72 (72 ÷ 3 = 24 years).

Estate Conservation

One popular reason for owning life insurance is to provide liquid funds to help heirs pay estate taxes and any other debts. Considering that the estate tax has changed several times over the past decade, it’s a good idea to review your coverage in light of current estate tax laws and your net worth.

As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable.

1) USA Today, December 3, 2010

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2011 Emerald Connect, Inc.

Securities offered through Paulson Investment Company, Inc. Member FINRA / SIPC.

Paulson Investment Company, Inc. is an FINRA registered securities broker-dealer and SEC Registered Investment Advisor registered in all 50 states. This website is published in the United States for residents of the United States. Paulson Investment Company, Inc., is a member of the Securities Investor Protection Corporation (SIPC).

Paulson Investment Company, Inc., professionals may only conduct business with residents of the States and/or jurisdictions for which they are properly registered. Therefore, a response to a request for information may be delayed. Investors outside the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Products and services mentioned in this website may not be available in all states. To request information, contact your Acumen Investment Services investment professional. Paulson Investment Company, Inc. is not soliciting business in any state or international jurisdictions where it is not registered. No statement within the website should be construed as a recommendation to buy or sell a security or to provide investment advice.

PLEASE NOTE: The information being provided in this website is strictly as a courtesy and is for informational and/or educational purposes only. Neither Acumen Investment Services nor Paulson Investment Company, Inc., have prepared or provided content in many of the areas of this website, including but not limited to: articles, calculators, research, calendars, dates, forms, questionnaires, etc. At certain times throughout this website, you may click on a hyperlink which may make you leave our website and go to an outside site. When you link to any of the web sites provided here you are leaving our website and we make no representation as to the completeness or accuracy of information provided at these outside web sites. Acumen Investment Services nor Paulson Investment Company, Inc., is liable for any direct or indirect technical or system issues, or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to. Neither Acumen Investment Services nor Paulson Investment Company, Inc. provide legal or tax advice. Information or references made concerning legal or tax issues are for informational purposes only and should not be relied upon as certain. Please consult an attorney. tax professional or your registered representative to re-confirm the accuracy and timeliness of any information that you may find at this website in these or any of the previously mentioned areas.