I’ve spent a considerable amount of time with clients reviewing life insurance policies. Most policies are far more complicated than the average person expects.

In the right circumstances, there’s a place for permanent insurance in the form of whole life or universal life policies. These policies usually have an underlying investment component, which is managed by the insurance company. The return on this investment component has dropped considerably over the last ten years. 

While the return on the underlying investment component could still drop a little further, the risk on these types of policies has reduced significantly. Projections are prepared using current rates of return, so the projections are considerably lower and more realistic than a number of years ago, when interest rates were far higher.

If you’re considering purchasing permanent insurance, make sure you have a complete understanding of the policy. This is a long-term commitment.