They say life insurance is like a parachute. If you don’t have it the first time, odds are you won’t need it again. A funny line, but all kidding aside, life insurance is the only way most people can provide for their families if they should die. But what happens when it ends? Rob talks about that first. This is Faith and Finance - biblical wisdom for your financial decisions.

• We’re talking about term life insurance, which we almost always recommend. Term is far cheaper than whole-life and doesn’t mix investing with a death benefit. You’re much better off investing separately from something offered in an insurance policy. Term insurance, by definition, ends when the term expires and we often get this question from listeners, “What then?” Generally, you have four options:

1. Simply let the policy lapse. If you had a 20-year policy that’s ending, at this stage of your life it’s quite possible that you no longer need life insurance.  If the kids are grown and out of the house, supporting themselves, and your spouse’s income plus Social Security survivor benefits is sufficient, then life insurance is a needless expense that you can put to better use in your retirement account. But if you still have dependents who rely on your income, or a spouse whose income can’t meet expenses, then you still need to have some type of term policy. And that leaves you with three more options.
2. You can get a completely new term policy when the current one expires. We normally recommend one with a death benefit of 10 to 12 times your salary. Don’t be surprised by how much more a new policy at this later stage in life will cost. A 50-year-old healthy male can expect to pay around $80 a month for a 20-year, $500,000 policy or around four times the cost for a 30-year-old. That’s simply based on actuarial tables; it’s nothing personal. If the policy is only to provide for your spouse and not dependent children, you may be able to get by with less. For example, a policy that would pay off just the remaining principal on your mortgage, if any. 
   While the cost of a new policy might have given you “sticker shock,” it’s usually less than you’ll have to pay to simply extend your existing policy, which is another option.
   Why is that? If you decide to get a new policy, you’ll have to go through all of the underwriting procedures you did at age 30— a medical exam, giving an extensive medical history, blood test, and so on. When all of that is complete, the insurance company has a pretty good idea of the risk it’s taking on.
   Let’s say you go through all of that, and you’re approved for a new term policy, but the monthly premiums are too high. You have a few ways to bring them down:
   • You can lower the death benefit. Instead of $500,000, maybe you can get by with just $250,000. The company may encourage you to buy more insurance than necessary, so you have to keep your own needs in mind
   • You can also lower the term. Instead of getting a new 20-year policy, maybe you can get by with a 10-year term—again, just long enough to get the mortgage paid off, for example.
   • You can save up and opt to pay your premiums annually, instead of monthly. Some companies will give you up to a 5% discount for making a yearly, lump sum payment.
3. When your term insurance policy expires you can simply extend it. If you decide to go that route, there’s usually no medical work-up required. But since the insurer is going into this blind, with no idea of any medical conditions that may have arisen in the past 20-years, the premiums will be higher than you’d have with a new policy, sometimes a lot higher.
   Keep in mind, if you have developed a serious medical condition, you may not be able to get a new policy at all. In that case, extending your current policy is definitely the way to go, if you can afford it.
4. If you can’t afford the cost of extension, get what’s called a “simplified term” or “instant issue” policy. As you might guess, an instant issue policy requires no medical checkup. You apply, you’re approved, and you start paying premiums. And usually, you can do all that online.
   If you’re thinking that sounds too good to be true; there must be a catch, there are three: First, the death benefit with this type of term policy tends to be smaller. Second, the term is likely to be shorter, and three, it probably will cost a lot more than a regular term policy that includes a medical exam. But for some folks, an instant issue policy could be a real blessing when their current term policy expires.

Next, Rob answers these questions at 800-525-7000 or via email at askrob@FaithFi.com:

• If your husband has been asked by a relative to lend them funds but you are concerned about enabling someone who is not living responsibility, should you abide by Matthew 5:42 "Give to the one who asks you, and do not turn away from the one who wants to borrow from you"?
• How should you approach selling your car if the monthly payment and you want to get out of debt, but you can only get $10,000 less than you owe?
• How can you locate the administrator of an old 401k if the company you were employed by went out of business? (Rob referred the caller to unclaimed.org).
• What will be the new interest rate on I-Bonds when it re-sets in May?
• What are alternative ways to save for kids' college and other needs over and above 529 plans?

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