Life Insurance. Want it? Need it? Who Cares?

Life insurance is probably one of the most underutilized and misunderstood products on the market today.  It seems like most people know that they should have it, and might even want it, but getting it is often a whole different story.

Lets start with the purpose of life insurance.  The most common reason is to pay for debts or things that people were planning to pay for prior to an untimely demise.  This site offers a plethora of reasons to have life insurance (http://www.dfs.ny.gov/consumer/cli_analy.htm).  The cool thing about life insurance is that you don't have to have alot of money to have coverage.  It is only product available that creates an instant estate once a policy is issued.  As with any financial product, planning is highly important, and the longer one waits to get it, the more expensive it becomes.  A wise man once told me that you buy life insurance with your health, not your wealth.  What makes this true is that once you are sick (depending on the severity of the illness), life insurance is out of the question (most companies don't like to buy claims for sick people).  On the flip side, if you are young and healthy, life insurance is cheap, and easy to get. 

We have established that having life insurance can provide a legacy for anyone that has a policy.  From the poorest pauper to the richest billionaire, as long as the premiums are paid, a claim can be made and paid to beneficiaries.....Legacy.  The beautiful thing about life policy benefits is that they are paid tax free to the beneficiaries.  This is not a blog about tax free growth, but life policies can do some interesting things (a future blog). 

 

This is where the wheels can come off the train. Term vs. Permanent insurance.  There are many schools of thought when it comes to this argument.  Some people are very opinionated in there beliefs in one or the other.  The angry people typically support the Suze Orman/Dave Ramsey approach....Buy term and invest the rest +Ashley Barnett .  The people that believe in permanent life (whole or universal) like the idea of growing cash in a life vehicle, getting a decent rate of growth, and doing it in a tax free manner.  I could do a whole article on each of these.  I believe that there is a good use for both of these products, and they are often best used in conjunction       with eachother. 

 

I haven't even scratched the surface.  Life insurance is underutilized because it can be used for multiple purposes:  retirement, college fund, protection against untimely death, hedge against taxes (always going up), and peace of mind.  It is misunderstood because many of the people that know that they need it don't know why, or how to use it when they get it.  This is just another example demonstrating the need for a competant agent to help guide folks through this decision making process.  The main mistake that almost everyone makes is in estmating how much insurance they actually need.  This calculator from ING helps with that (http://ing.us/employers/employee-benefits/products-services/life-insurance-add/life-insurance-calculator).  The results are astounding. 

 

As to the initial question, Want it? Need it? Who Cares?

 

People that want it don't know how to get it (or how affordable it can be).  Everyone needs it.  Who cares is the real question.  A career life insurance agent told me "the only people that don't need life insurance are people that don't love anyone".  I don't know if he was joking, and I'm not sure how I feel about it, but it speaks to the reason that anyone would get life insurance: for the ones left behind.

 

Opinions, thoughts and comments are always appreciated.

 

Get Facebook Buttons



Todd Uzzell
www.insphereis.com/tuzzell
todd.uzzell@gmail.com