Life Insurance

Why Don’t More People Own Life Insurance?


One of the biggest things I learned

in the military long ago was that proper prior planning prevents pitifully poor

performance. I am astonished at the number of otherwise seemingly intelligent

adults who do not have

some amount of insurance,

even if only enough to prevent placing the financial burden of paying for their

funeral on their loved ones upon their death.

Life insurance comes in all shapes

and sizes and there IS a plan available to satisfy everyone’s needs. Some plans

are temporary; some plans are permanent. The younger one purchases coverage,

the cheaper it will be. Today’s life insurance policies are no longer the

“death” insurance policies of yesteryear. Many companies offer

products with LIVING benefits – benefits that guard against the insured

becoming chronically, critically or terminally ill at some point during their

lifespan, and allow for the access to the majority of the death benefit while

the insured is

still alive.

Some will argue that they don’t

have a “need” for life insurance, that they have the assets to cover

the cost of a funeral. But I believe in the

smartest use of money. If the average funeral

in the US costs around $10,000 (and that’s if you die TODAY and doesn’t take

into consideration rising costs and inflation), instead of having to drain an

account of $10,000, or worse, having to sell off assets to come up with the

cash, a Single Premium Whole Life policy typically delivers at least a 25%

return on one’s money (depending on age). That’s an IMMEDIATE return! For

example, with one of my carriers, a 65-year-old female non-tobacco user could

“trade” a premium of $10,000 for an immediate death benefit of

$18,552.88. A male of the same age would get $16,393.44. Throughout the life of

their policy, they would still have access to 85% of the cash value of their

initial deposit in case of emergency. The younger one does this, the greater

the return – a 50 year-old would get $28,490.03 for the same $10,000.

My point is this: besides the

obvious uses for life insurance, there are many other usage factors to think

about.

Life insurance can be used for

replacing a stream of income, providing heirs with liquidity when they need it

most, replacing the value of an asset, paying estate taxes, maximizing your

pension or Social Security benefits, funding college for the kids and

grandkids, providing liquidity to an estate, buying out a business partner,

protecting a business for the replacement value of a key employee, satisfying

debt, funding charitable gifts, providing for a special needs child or adult,

equalizing an inheritance, longevity planning, and balancing investment risk.

The key is speaking to a

professional who is capable of helping you navigate the sometimes-choppy waters

and educating yourself on how to utilize life insurance as a tool instead of

looking at it as just another expense.

Photo ©iStockphoto.com/zimmytws



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