Some people reach a point in their lives where they feel they no longer need their life insurance policy, but a Santa Clarita financial advisor is encouraging residents to consider their options before cancelling their policy.

“A lot of people are letting their life insurance policies lapse, which means they’re just letting them go,” said Arif Halaby, a Certified Estate Planner and president/CEO of Total Financial Solutions. “You are letting a valuable asset go away.”

When an individual first applies for their policy, they are typically approved for a guaranteed length of time — 30 years, for example — based on the current state of their health, meaning that it won’t change even if the policyholder is diagnosed with a terminal illness a year later.

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“That means your cost will never increase for 30 years and your death benefit, which means the payout, will never decrease for 30 years,” Halaby explained. “Where the problem comes in is, we are finding that a huge percentage of people after two, three, four, five years are letting their policies lapse — just going, ‘Nevermind, I don’t need them anymore.’”

While an individual can usually do this with no fee or risk, Halaby cautioned that if the person ends up needing life insurance again in five or 10 years, it will cost them much more because of their increased age and likely decreased health.

Rather than cancel the policy altogether, Halaby recommends residents make necessary adjustments to reflect their current needs.

“There are policies out there that allow you to raise the amount that you pay (so) you get a little bit more insurance … or to reduce the amount because you just don’t need as much and you don’t want to pay as much,” he said. “It allows you to say, ‘I’m going to be flexible with the payment and flexible with the death benefit.’”

Another option Halaby advises residents to consider is actually selling their policy for a cash payout, which he noted is a legal strategy not many people are aware of.

“You get to the place (where) you say, ‘I have something that’s worth $500,000 or $1 million, but I really don’t need it — my wife’s taken care of, my husband’s taken care of,’” Halaby said. “You can take that life insurance policy and find a buyer for it, and in doing so, you are now in a position to say, ‘Give me some money for that.’”  

Halaby concluded, “The key is, I don’t want you to let these policies go and not collect.”

Total Financial Solutions offers assistance with preparing for retirement and financial planning in Santa Clarita and the surrounding valleys. Santa Clarita financial advisor Arif Halaby, a Certified Estate Planner, and Total Financial Solutions staff work with people of all ages, helping them protect, grow and preserve their assets through an individualized approach. As a well-known financial planner, Arif Halaby is also the host of “Total Financial Solutions Safer Money Hour” on KHTS AM-1220. Launched in 2004, the show offers listeners financial planning tips and guidance for dealing with today’s ever-changing financial needs from the perspective a financial advisor.  

Total Financial Solutions, Inc.

24322 Main Street

Newhall, CA 91321

661-753-9683

800-990-7344