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Now is the time to start planning

February 22, 2012
Times Leader
By GLYNIS VALENTI , Times Leader Staff Writer People in their 20s and 30s who may have recently graduated from college, started a brand new career or are planning a wedding are rarely thinking about finances 50 or 60 years ahead. Insurance agents say it’s really the best time to do so, however. Planning early will save a substantial amount of money and provide peace of mind in the long run. There are several types of life insurance, but the two most common are term and whole life. Term insurance has limits set at the time of purchase, usually five to 25 years and $100,000 to $1 million. Whole life insurance covers the holder for his or her entire life as long as the premiums are paid. Thomas Paree, of Paree Insurance, is “a big believer” in term life. Not only, he says, are term life rates competitive especially in the younger age groups, but term offers a large benefit for relatively little money. For the years during the policy, the holder knows that in the event of his death, student loans, car loans, funeral expenses and even a mortgage can be covered by the benefits, taking a heavy burden off of loved ones. At the end of the term, the policy holder can either renew for another term at a slightly higher premium, or convert to a whole life policy. Whole life insurance premiums are more expensive than term premiums, but are less expensive than continually renewing term policies and can also build cash value. In addition, if the benefit remains the same, the premium will remain the same, which is why purchasing a policy at a younger age could save money in the long run. A term life holder can change over to whole life at any time. Premiums are based on age, health, gender, occupation and smoking guidelines as they are with most any insurance rates. Advantages to taking out a policy at an early age include locking in a lower rate and the ability to add coverage more easily according to Paree. Many companies also offer multi-policy discounts, for instance bundling car, house and life insurances. Here is an illustration of the savings to younger purchasers. A $100,000 term life policy for 20 years would cost a 55 year old male in very good health an estimated minimum of $38 per month. The same policy for a 25 year old male would carry a monthly premium of $11.31. “Life insurance is an intangible,” Paree explains. “Thoughts about it are usually triggered by life changes such as getting married, buying a house or having children.” Such was the case with Ben Seidler, 29. “It’s funny how a lot of things that never cross your mind come into focus once you have children. The thought of leaving my wife to provide for our young children by herself weighed heavily on me. Dealing with the loss of a loved one would be hard enough without worrying about losing everything you own because of the loss of an income. Life insurance is incredibly inexpensive at my age, and is the absolute best investment I could make to ensure my family is protected if something were to ever happen to me.” His brother, Chris, found that the combination with his current car policy gave him a discount that covered the cost of his life policy. “As a 26 year old without debt or children, I don’t feel the need for a significant amount of life insurance. I do appreciate the discount it generates on my car insurance and will adjust my coverage when my life’s circumstances change.” Paree, in the insurance business since 1989, says that he’s seen instances where a spouse could have used the funds from a policy to help with expenses after an unexpected death, and that is why he believes so strongly in life insurance. Companies offer sub-categories or variations of life insurance that can be linked to investments, interest bearing accounts and cash value programs. An agent can assist in determining what type and amount would fit a client’s needs. “That’s what I really like about my job,” Paree adds, smiling. “Having that conversation with my clients about dreams, about the future—and how to protect all of it.”

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