Should I Overfund my Life Insurance

One of the most frequently asked questions clients ask is, "Should I overfund my life insurance?" The answer is: Yes or no.

Let's go deeper.

When it comes to permanent life insurance you have options. A whole life insurance product is a guaranteed life insurance policy to the age of 99. You pay a premium and it's guaranteed until then. An Indexed universal life insurance product (IUL) is not guaranteed. It has the potential to last until you are 120 years old, but it also has the potential to expire sooner.

You can buy multiple insurances for different reasons. You can decide to buy an IUL, for example, and overfund it so that more cash value grows, but your death benefit is smaller. You can possibly get an IUL that's more for the death benefit and living benefits and the cash value won't grow as much because the cost of the policy will be higher. It depends on how you structure it and what your outcome is. Other reasons people buy life insurance is to protect their mortgage with mortgage protection life insurance.

You may even decide to buy a term life insurance product for about 20 or 30 years so you have a guarantee of coverage as long as you make your payments.

When it comes to funding your IUL, it is generally advisable to fund it more if you can so that it expires later in life (If that's your goal), but to also provide more "juice" to increase that cash value.

If it's been a while since you've taken a look at how your life insurance is growing, please book a free no obligation consultation here.