How to Save Money by Laddering Your Life Insurance Polices
You may have taken advantage of our Pivot Life Insurance Calculator | Assess Needs tool and determined how much life insurance coverage you need. You may want to purchase life insurance to pay off the mortgage, send children to college, replace income, and pay off debts. When you enter your debt load into the tool, you will be given a estimate of the amount of life insurance coverage you will need.
Consider the following example, you may have a $250,000 30 year mortgage and you would like to leave $150,000 for college expenses for your two children who will be attending college in 15 years. Additionally, you would like to provide income replacement of $80,000 for 20 years and you have $100,000 in debt that will be paid in 10 years.The total amount of life insurance coverage needed $2,100,000. You have now completed an important part of the decision process in determining how much life insurance coverage you need.
Should you consider a single term life policy or multiple term life policies to provide the protection you need? Should you consider a 10,15, 20 or 30 year term policy?
You may want to consider a concept called laddering life insurance policies, which means buying several life insurance policies over a period of years coinciding with the period the coverage is needed for. Purchasing the amount of coverage for different needs and different periods can possibly save you money by not buying more life insurance than what you need. Using the example above, you may want to consider a $250,000 – 30 year term policy, a $150,000 – 15 year term policy, a $1,600,000 – 20 year term policy and a $100,000 – 10 year term policy.
Compare the premiums when you are getting a quote using the laddering concept as opposed to the full amount of life insurance needed for the longest term period. You may find substantial savings using the laddering concept.
About the author: Ken Buccico holds a LUTC designation and has been in the life insurance business for 39 years. His wealth of experience empowers clients to make best possible decision regarding a life insurance policy. To explore the best life insurance option, contact Ken at 1-800-651-1953 or KBuccico@Pivot.com.