Ep. 159 Term and UL Policies Lapsing

On today’s episode of Wealth Talks, the McFies tackle an issue for many policyholders: why do Term and Universal Life insurance policies lapse? As premiums continue to rise, many find themselves unable to keep up with the costs of these types of coverage, causing them to lose their insurance unexpectedly.

The Reality of Rising Premiums

Term and Universal Life insurance can seem appealing at first because they often start with lower premiums. The McFies explain how these “lower” premiums don’t stay low forever. As the policyholder ages, premiums rise significantly—especially with Term insurance, where premiums can jump sharply after the initial term ends. Universal Life, while more flexible, is also subject to premium increases if the policy’s cash value doesn’t grow as expected or if costs within the policy rise.

What Causes Policies to Lapse?

For many policyholders, these increasing costs lead to difficult choices. When premiums become unaffordable, people often lapse their policies, either by letting them expire or surrendering them before they reach their full benefit.

The Impact on Financial Planning

When a life insurance policy lapses, it can have a significant impact on a person’s financial security and legacy planning. Without a death benefit, loved ones lose an important safety net. Years of premiums may go to waste without a payout, and alternative coverage becomes more expensive as people get older or develop health conditions.

Finding a Sustainable Solution

Tom and John share insights into choosing sustainable coverage that won’t outgrow your budget. They highlight options that focus on long-term value and stability, allowing policyholders to protect their loved ones without fear of unaffordable premiums down the road.

If you’re curious about the long-term viability of Term or Universal Life insurance—or if you’re concerned about rising premiums—this episode provides the insights you need to make financial decisions that align with your goals. Tune in for an in-depth discussion on how to protect your insurance coverage for the future.

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