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Stability for Challenging Times

Provided by Eric Kala CFP®, CIMA®, AEP®, CLU®, ChFC®, CRPS®

In volatile economic times like the ones we’ve seen recently, it’s not surprising that people want something they can count on — a stable financial asset that will be there to help them meet important financial needs, no matter what. For many, that vehicle is permanent life insurance.

Permanent life insurance (sometimes referred to as whole life insurance) is a unique financial tool. That’s because it can provide a foundation of protection for your entire life, no matter how long you live (assuming that premiums are paid to keep the policy in force). In contrast, term life, another popular type of insurance, provides coverage for a specific period of time, such as 10, 20 or 30 years. This means a term life policy might end long before your need for it does.

Cash value that is guaranteed to grow each year, tax deferred, regardless of what’s going on in the market.

Keeping pace with changing needs

The ability to provide protection for your family throughout your life can be a vital benefit, especially given the fact that life expectancies are on the rise in America. Today, it’s not uncommon for someone to live two or more decades into retirement. And, where once expenses tended to fall as people aged, that’s not necessarily the case these days: You may be retired, but that doesn’t mean your mortgage or other expenses are retired too. Similarly, you may have a pension plan, but those benefits may pass away when you do, leaving your spouse without a financial safety net after you die.

Permanent life insurance lasts for the rest of your life; it’s there when you need it. And because permanent life provides a guaranteed payout, you don’t have to worry about becoming uninsurable later in life. Regardless of your health, your family or your business is protected.

Planning flexibility today … and tomorrow

Equally important, permanent life insurance also provides cash value that is guaranteed to grow each year, tax deferred, regardless of what’s going on in the market. This amount can be used in the future for any purpose you wish.

For example, you can borrow against your policy’s cash value, generally on a tax-free basis, and use that money for a down payment on a home, to help pay for your child’s college education or to supplement your income in retirement. Keep in mind that any loans you take will accrue interest and decrease the cash value and death benefit of the policy if you die before paying them off. However, if you decide to stop paying premiums and surrender or cancel your policy, the accumulated policy values, less any loans and interest, are yours.

A cost-effective alternative

Many permanent life insurance policies also are eligible for dividends, which can add to your death benefit and any cash value, which grows tax-deferred.

These dividends, which are not guaranteed, can be used to pay all or part of your premiums, helping to reduce or even eliminate your out-of-pocket cost for coverage. They can also be used to increase your total death benefit over time without increasing your premiums.

The power of partnership

While cost is an important factor when considering any type of insurance, it’s important to look at more than just the premium. You’ll want to also consider the financial strength of the insurance company, including its claims-paying ability and track record of paying dividends.  After all, you want a company that is likely to be there for you when you need it.

You’ll also want to understand what you’re buying. This is where a trained financial advisor can help. A good financial advisor will help you evaluate your goals and objectives, and help identify which products offer the most appropriate solution for your unique circumstances. And, equally important, a trusted advisor will review your insurance policies with you every year to ensure it continues to meet your changing needs.

Avid Wealth Partners

17802 W Interstate 10, Ste. 114
San Antonio, TX 78257
210.446.5751 |

Article prepared by Northwestern Mutual with the cooperation of Eric Kala. Eric Kala is a Wealth Management Advisor with Northwestern Mutual the marketing name for The Northwestern Mutual Life Insurance Company (NM), Milwaukee, Wisconsin, and its subsidiaries.  Eric Kala is an agent of NM based in San Antonio, TX.  To contact Eric Kala, please call (210) 446-5755, e-mail at or visit  This information is not intended as legal or tax advice.


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