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BY NATHANAEL HUGHES, MBA

The past decade has been a time of growth and prosperity; however, more recent economic events have reminded us of the importance of protecting what we have.

Which is why it may be time to consider a product that’s often overlooked in a financial plan: life insurance.

It may not be trendy, but life insurance brings a lot to the table when it comes to stability and peace of mind.

Of course, there are the obvious benefits: If you pass away it can help your loved ones pay off funeral expenses, debts, maintain their lifestyles, and pay for your kids’ college.

But some policies offer other features that can help you later in life too: They can be used as supplemental retirement income, provide cash to hedge down markets, or create guaranteed income to create a legacy when you pass away.

So why don’t more financial professionals recommend life insurance as part of a financial strategy?

It is my belief that conversations around insurance can be hard to talk through, especially when it is tied to our passing. It is always more exciting to talk through saving money, building wealth, or putting “Johnny” through school.

Although the offensive side of planning is exciting, it is relevant and necessary to talk through the defensive side of your plan.  

When it comes to choosing a policy, it is a common misconception that a term or permanent insurance policy is your only choice. Those are the two basic types of life insurance, but that doesn’t mean it’s an either/or situation.

With permanent life insurance, the death benefit is paid to your beneficiaries whenever you pass away. The premiums stay level over time, and it accumulates cash value that grows on a tax-deferred basis.

That cash value can be used for anything you desire as a living benefit: vacations, paying for your daughter’s wedding, supplementing retirement, etc.

Term insurance, on the other hand, provides a payout only if you pass away within a certain period of time which is referred to as the term.

Life insurance companies can offer term policies for 10, 20, or even 30 years. Term insurance typically allows the consumer to purchase a big face amount of insurance at an affordable cost.

Over time as terms expire, the consumer can corner themselves in a situation where they become uninsurable with changing health “post term” or premiums become unaffordable upon reapplication later in age.

Initially, the premium for term insurance is considerably lower than permanent, but in the long-run, the net cost may eventually be lower with permanent insurance depending on how long you live.

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Is life insurance missing from your financial strategy continued…

How do you know whether you should have term or permanent?

What meets your needs depends on many factors, such as what you want to protect, how long you’ll need the insurance (just a few years, or is this going to be part of the legacy you leave your kids, grandkids or charity?), how your life (and insurance needs) might change over time, and what you can afford.

But it’s also very important to remember that no one product can cover all possible circumstances.

While it might make sense for some people to have all term or all permanent, it’s possible that you’d be best having a combination. You could split evenly between them, have more of one than the other, or plan to convert term to permanent in the future. 

There are a lot of possibilities and no one-size-fits-all solution.

So, what’s the best way to figure out what life insurance options are best for you? Get help from a financial advisor. A solid advisor will help determine what role insurance should play in your personal financial plan, and they won’t just push a product on you.

They’ll realize that your financial security is critical and that their relationship with you is long-term.

They’ll ask you what goals you’re working toward and they’ll help you figure out a strategy to reach them. And then they’ll keep working with you year after year to make sure that your plan is keeping up with your ever-changing life.

Article prepared by Northwestern Mutual with the cooperation of [Nathanael Hughes, MBA ]. [Nathanael Hughes, MBA] is a [Financial Advisor] with Northwestern Mutual the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, Wisconsin, (Northwestern Mutual)(NM) and its affiliates. [Full Name] is an insurance agent of NM based in [Johnson City, TN]. To contact [Nathanael Hughes], please e-mail [Nathanael.Hughes@nm.com] or visit