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Should I buy term life insurance or variable universal life insurance?

That depends, of course, but to help that question, let’s define the two.  

Term life insurance is for a specific period of time – a term – with a fixed premium. Use it or lose it. When the policy expires, some companies will allow you to extend the term, always at a higher rate. The older the person, the more term life insurance plans cost, though the premiums almost always cost less than universal life policies.

Universal life is a form of permanent insurance sometimes referred to as a cash-value policy. These policies combine death benefits with a savings component that is reinvested and tax deferred. When you’re younger, more of your premium goes to that savings component. As you get older, more goes toward the purchase of the insurance. 

Of the two, term is the most basic and common type, because, most experts say, it makes the most sense for the average person who wants to insure themselves against unforeseen events. Of course, that’s not always the case. There are tax advantages and investment opportunities associated with universal life plans, and if you’re less concerned about high monthly premiums, universal might be a smart choice for you.

Not sure what’s right for you? Contact your financial adviser.  


Should I buy a car or lease one?

This is one of those questions that has been asked and answered hundreds – OK, thousands – of times over the years, but it’s worth re-asking during a pandemic, when most people are driving and traveling less. Before we explore that angle, let’s focus on the pros and cons of buying and leasing. 

With buying, you own the car and you get to keep it as long as you want. With leasing, you keep it for the length of the lease or pay a huge penalty for returning it early. Buyers almost always pay higher monthly payments because they’re paying off the entire purchase price, while those who lease are paying off only the vehicle’s depreciation during the lease term.

 Buyers can customize their vehicles and hope that those customizations will increase their value. If leasers do that, they have to remove the customizations at the end of the lease period and return the vehicles as they received them. When buyers no longer want their cars, they have to decide how to sell them, or trade them in for another car -- and learn how much they depreciated. Those who lease just return the vehicle and walk away, but with no equity.

 How does the pandemic change things? Leases come with annual mileage limits, usually 12,000 to 15,000. Exceed those limits, and it will cost you. But with most people driving less during the pandemic, there is less risk of that happening, and it opens up the possibility that you can negotiate a lower monthly lease payment by driving, say, 10,000 miles or as few as 7,500 miles a year.

 

Should I get a 15-year mortgage or a 30-year mortgage?

 This may seem like a strange question to ask in the middle of a pandemic, but most qualified buyers have not lost their jobs, interest rates remain historically low, and houses are selling fast because the supply is low nationwide.

 If you don’t want to read past this sentence, the short version is 15-year mortgages generally make sense for borrowers who can afford higher monthly payments because those buyers will pay much less interest and build equity much faster than 30-year borrowers. But there are pros and cons to each.

 We’ll start with the 15-year mortgage. The advantages are obvious: You can repay your mortgage sooner, save a lot of money on interest, and build equity faster. The disadvantages? You must pay more per month, which means you have less money to spend on other things, and you receive less of a tax advantage because you pay less interest and can write off less interest on your tax returns.

 With the 30-year mortgage, you pay less each month, and you can use that money to repay debt with higher interest rates or save that money and invest it, and put yourself in a better position to handle financial emergencies. The downside of this type of mortgage is you have to pay a lot more interest, and it takes much longer to build equity and repay your mortgage.

 There are significant pros and cons to both, so before you decide which is best for you, get a handle on your budget, and figure out what you can afford to pay each month.