Life Insurance and the million-dollar question – Term vs. Permanent Life Insurance 

Five Things You Should Know

1. Equity Markets – rose this week with U.S. stocks (S&P 500) up 4.8% while international stocks (EAFE) dropped -.25%. 
2. Fixed Income Markets – were up this week with investment grade bonds (AGG) up .8% and high yield bonds (JNK) up 1.4%. 
3. Election Result Reactions – Following Republican nominee Donald Trump’s victory this week bond yields and stock futures rose in anticipation of more favorable corporate tax policy and deregulation. While a complete sweep of government would make the pathway for enacting policy much more straight forward, as of writing it has not been determined which party has won majority of the House. 
4. Fed Cut – As expected this week the U.S. Federal Reserve announced another quarter-point reduction to its benchmark borrowing rate, with Fed Chairman Powell fielded numerous questions about his future as head of the Fed. Aides from Trump’s team have stated they have no intention of removing/attempting to remove Powell from his position before his current term is up, while Powell firmly responded “No” when asked if he would step-down if asked. 
5. Key Insight – [VIDEO & ARTICLE] In a world where many financial pundits talk in absolutes, it’s important to work with a partner that doesn’t paint everything with a broad brush but understands the nuance in many of these topics. Many times this nuance evolves around hot button issues, like life insurance; and your success could be influenced heavily with who you trust to help not only translate these evolving concepts but in turn move them forward in to action.

Insights for Investors

By Dave Gordon

Life Insurance and the million-dollar question – Term vs. Permanent Life Insurance

A question we get all the time from clients is one that has been debated fiercely over many years; whether to buy a cash-value life policy or a term life policy. What’s better? This is a heavily debated topic that engages even the highest profile public figures like Dave Ramsey. Buy term life and invest the difference he’d say. No questions. Full stop. (Source: Ramsey Rapid Reads) 

Like many topics in finances, we at TEN tend to see this as a more nuanced question. What are the purposes for the insurance? Income replacement, family protection, estate planning, business buy/sell?  

I will say that most cases we come across, a nice 20- or 30-year term life policy will suffice for most, but this does not mean there aren’t many times where a permanent policy makes the most sense.  

Take, for example, someone that is expecting a large estate tax bill and needs liquidity to pay what could be a sizeable chunk of money. Is it better to sell off some assets, potentially at an un-favorable price, to come up with the tax proceeds? I’d argue potentially utilizing a permanent policy in a life insurance trust structure outside of the estate may better suit many as they think through what they’d like to pass on to their heirs and charities while controlling what and how taxes get paid to the IRS. I can think of many more examples and solutions, but that’s for another time. 

The bottom line is that there is no one-size fits all solution, regardless of what the talking heads say. A conversation with a trusted advisor who knows you and your family and what your aspirations are is key to properly assessing what may make the most sense in your situation.  

Luckily, I know a team that loves to have these types of conversations. We’re here anytime you’d like to connect. 

To your health and living well-thy, 

Dave and the team at TEN 

Data, Just the Data

• U.S. Jobless Claims – initial claims rose by 3,000 last week for a total of 221,000 and in-line with expectations. Continuing claims also ticked higher to a total of 1.892 million, the highest level since November 2021.  

• Eurozone Retail Sales – rose by 0.50% in the month of September for the third consecutive month of expansion.  

• U.S. Composite PMI – came in at a reading of 54.1 in October, with output price inflation dropping to its lowest level in 53 months.  

• U.K. Composite PMI – fell to 51.8 in October for the slowest pace of growth since November 2023, but still in expansionary territory.  

• China Composite PMI – rose to 51.9 in October for the highest reading since June following a series of policy measures aimed at bolstering an economic turnaround.