Why Don’t More People Own Life Insurance?






Why Don’t More People Own Life Insurance?

April 21, 2017

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

(Why?)

Published at Fri, 21 Apr 2017 14:00:00 +0000