The Downsides To Life Insurance Laddering
First, laddering is complicated. It requires drawing out a fairly accurate 30-year plan for you and your family, and assumes no significant changes in that plan. If you purchase your plans from multiple companies, it means procuring multiple death certificates and dealing with multiple life insurance companies instead of one.
Second, life is constantly in flux, and your situation may change. Maybe you got an unexpected raise (time for that new flat screen!), maybe you are suddenly diagnosed with an unexpected illness, or maybe you find yourself supporting someone in an alcohol rehab center during your later years. All of these significantly change your overall costs and liabilities you may leave behind.
Those who are very young and fit may not see significant savings from laddering, and the hassle may just not be worth it.
The bottom line?
Life is unpredictable, and laddering life insurance can potentially make your life insurance policy less adaptable.
In other words…
The juice may not be worth the squeeze.
Laddering may also be risky if you plan on significantly improving your standard of living later in life. If you plan to take out a mortgage to buy a second home at 65 on the beach (DON’T DO THIS), it would leave your spouse or loved ones with a significant debt burden if you pass before paying it off. In this case laddering would not be an ideal choice.
So, let’s sum all of this up.
Talk to an independent insurance agent who knows the ins and outs of the life insurance market to help you find the right policy for you.
Doing your research is great, but everyone’s situation is different. Sitting down with an expert and explaining your situation will help you determine whether or not life insurance laddering is the right fit for you.
And who knows? If everything works out you might just be able to squeeze a vacation in paradise out of it.