A financial lesson learned

Do you have a life insurance policy? What kind? And when did you last review it to make sure it still meets your needs?

Throughout most of my career, I was covered by term insurance provided by my employer. But, when I was about 30 years old, I bought a small insurance policy called a "modified whole life" policy. Intended as "burial insurance," it also carried riders for my (then) minor children.

I was told that if I kept up the monthly premiums until age 65, it would be paid off. I would be able to borrow against it. And, if I wanted to, I could even cash it in. The policy sounded like a good deal for a small price.

So, for about 30 years, I paid my monthly premium. About every 10 years, the rates increased to reflect my "advancing" years. I didn't think too much about that, still believing that the policy was a good thing.

Then, about a year ago, I finally decided it was time to do some estate planning. I consulted a certified financial planner, who reviewed all of my assets and liabilities. One of the first questions he asked was, "Why do you have this insurance policy?"

In the fine print, he discovered that the value of the policy at age 65 (when it would be paid in full) would be less than half its face value! And because my financial status was considerably different from what it had been 30 years before, I no longer needed "burial insurance." He advised cashing it in.

I learned several important lessons from this:

• Get good advice before you buy. Most of us do not have the financial savvy to make informed decisions about insurance and other financial instruments.

• Find an advisor you can trust. Some "financial advisors" are only interested in selling their products. Others are true advisors who keep your needs topmost. Shop around to find the right expert for you.

• Ask a lot of questions. Don't buy anything unless you thoroughly understand it.

• Review your financial needs annually. Needs change; adjust your portfolio accordingly.

This issue covers many different aspects of financial management, from hiring the right accountant to planning your estate. I hope you'll enjoy it and be ready for whatever the future may bring.

Until next time,

Linda Segall, Editor-in-Chief