Let’s briefly touch upon a problem in dealing with inexperienced insurance agents and brokers. I ran into this situation a few days back and I want to share with you the misleading statement I heard.
There is a permanent insurance plan that allows you to pay the premiums over the course of a defined period of time (called “quick pay insurance”). That is, once the premiums are paid for 10, 15 or 20 years, the policy becomes “paid up”. There are no further premiums due and the coverage remains in place for life.
This can be a great plan if you need permanent coverage. It is perhaps the most cost effective way of purchasing permanent life insurance.
In a quick pay policy, cash values are accrued over time. This cash value is essential to keep the policy funded for life when you stop paying premiums.
I discovered that an inexperienced agent was telling a client that they could withdraw the cash values from a “10 year quick-pay” policy after 10 years, and that this would not have an impact on the policy.
The client was confused, as he believed this was both “too good to be true” and illogical. He was right.
You can borrow from the cash values, but taking the money out would surrender the policy. In other words, the policy would terminate (or lapse).
I am glad the client called me, because not only did I clarify the “misunderstanding”, but I found the client a better plan at a reduced rate. I suggested putting the money saved in a TFSA, which will further increase savings.
If something sounds too good to be true, or just plain unrealistic, it’s time to ask questions and perhaps get a second opinion.
Call or email me, and I’ll shop the market to help you save money and get the right plan.
Call: 905-235-3931 or 416-855-0245