.I have had some uncomfortable conversations with some clients regarding their life insurance.  It has come from clients I have absorbed over time from other agencies. These clients weren’t counseled properly on how to fund their permanent life insurance policy.

Permanent life policies are a different animal and they require a small amount of constant work.  What ends up happening, is the client funds this policy, but they underfund it.  You can start these policies with a small monthly amount but over time, the cost of insurance in some of these (mainly universal policies) will increase.

These policies have a separate account for cash.  That cash can grow over time.  When the policy is funded properly, it can grow ALOT.  If it is underfunded and you are just essentially taking care of the cost of insurance, it will never do what it is intended to do.  If this is your strategy, term life insurance is the best way to go.

The best course of action, is to overfund these polices from the start so that the cash grows.  As the cash grows, the magic of compounding interest kicks in, and the interest and earnings will greatly outpace the increase in insurance costs later in life.  It is highly recommended that you get with your insurance agent regularly, to make sure that these polices are on pace to perform properly for you.

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