I believe that almost all financial, investment or insurance offerings can help a specific need.  For example, a reverse mortgage can be a viable option in the right situation for someone.  But it’s not the right solution for everyone.  Also, sometimes these various offerings can be oversold simply for the financial benefit of the salesperson, rather than the benefit of the people buying the offering. 

Life insurance, particularly “permanent” life insurance, can pay out fairly high commissions. Therefore, insurance agents can be tempted to oversell a life insurance contract for a higher pay day. I’d like to think there are a lot of ethical and knowledgeable life insurance agents in the market, but it’s an important factor to know when considering a life insurance purchase. 

First, consider what kind of life insurance do you need?  There are two basic categories. Term life insurance provides a death benefit for a specific term (like 10 or 20 years).  It’s typically less expensive because there is no “savings” component, and the insurance company is only on the hook for the death benefit for a limited amount of time.  Permanent life insurance, such as whole, universal, or variable, means that as long as the policy is paid up, it will generally pay a benefit whenever the insured person passes away.  In other words, it has no time limit.   

So the overall question is: will you and your family always have a need for additional funds when you pass away?  To give a personal example, my wife and I bought a 20-year term life insurance policy when our two sons were born.  It was important to us to have that policy in place in case something happened to one or both of us while we were responsible for their care.  Now that our sons are self-sustaining adults well into their 20s, those policies have expired.  And, my wife and I feel that we don’t have a need for that life insurance coverage at this point in our lives. 

However, we all have different needs and wants.  So it’s important to choose the right tool for the job.  Permanent life insurance can provide much needed financial security and peace of mind for a spouse or dependent child, regardless of when the insured person passes.  Term life can be a great bargain for a specific period of time. 

My advice when purchasing life insurance is to know what risk you are trying to insure against, as well as what is a reasonable death benefit needed to cover that risk.  It’s also good to ask how much commission the insurance agent is getting from the sale.  Personally, I want to pay a professional a reasonable amount of money to provide a well-designed policy.  But you need to know how much that is and if you don’t ask, you’ll never know.  Here is a link to an excellent and more detailed article on life insurance commissions: https://www.thebalancemoney.com/life-insurance-agent-commission-2645804 

I hope this has been helpful.  Please reach out to me if you have any questions.