Although Hunter and his wife have a combined coverage of nearly $2 million in cash value, it was equally important that he create a long-term financial strategy for his children: Jasirah, Muhyideen, Maryum, Zulaikah, Inshirah, Layan, Umar, and Marwa.
While choosing a policy for children can be a difficult decision the Hunters felt it was the best choice. Each of his children has coverage worth $750,000 in cash value, which costs him about $700 a month. Although an expensive and unconventional choice itâ€™s one that Hunter, who makes an annual salary of $250,000 a year, insists on. He says his children can tap into the policyâ€™s cash value through the use of either a policy loan or by cancelling the policy and using the funds for retirement income, college tuition, a down payment on a home, or for emergencies.
â€śI now live with a level of security that I never had and it feels great,â€ť says Hunter. â€śI am confident that if I were to leave this earth tomorrow, my goals could be accomplished and my family will be secure.â€ť
Hunter did extensive research before he found a plan suitable for his family. Here are some tips to keep in mind.
â€˘ Create a policy tailored for you. Some insurance providers allow policyholders to add â€śridersâ€ťâ€”an additional set of terms and conditions that â€śrides onâ€ť the basic package. For example, the Hunters added a disability waiver to ensure that all future premiums would be waived and the policy would keep them insured if they were to become totally disabled.
â€˘ Compare policies. â€śInsurance policies look alike from the outside but there are little features that make them different,â€ť says Hunter. Ask yourself, â€śWhat happens if I get sick?â€ť â€śIf I make a withdrawal and repay the policy back by the end of the year will I suffer a penalty?â€ť â€śWill I still get dividends for the whole year even after the withdrawal?â€ť Hunter says, â€śSome stuff is obvious, but when you compare apples to apples you have to split them down the middle and see which one has a little bit of rot in it.â€ť
â€˘ Estimate your insurance needs. â€śWe had to determine how much we could afford and how much we needed for either of us to maintain our lifestyle after the other spouse was gone,â€ť explains Hunter. This calculation included Hunterâ€™s salary for the next three to five years, funeral expenses, the cost of operating his business, and overall financial obligations such as the mortgage, debt, estate taxes, etc. (See â€śThe Meaning of Life Insurance,â€ť Moneywise, September 2010).