Why Life Insurance?
The primary reason for life insurance is to indemnify someone for the economic loss that happens when someone dies. We can argue all day about the emotional loss when someone dies but that cannot be overcome with money.
When we are young, have a new family, life insurance is very important. Consider the economic loss to the family if the primary breadwinner should die suddenly. It’s devastating. Early in my career, I was asked to write a $100,000 term life insurance policy on the life of a young employee of a firm I was working with. I spoke with him about his concerns and with my rate book in hand, told him it would cost about $12 per month. He asked me come back the next week as he did not have the $12 to apply for the coverage.
A week later I was talking with the business owner about his employee‘s request. He told me sadly that the person in question had been riding a horse the previous weekend in the woods. At some point the horse went left around a tree but the rider, his employee and my potential client, went to the right and had hit the tree. He broke his neck and died.
For the lack of $12 to put the policy in force, he had deprived a young wife and child of $100,000.
Later in life, we simply want to provide some liquidity for our family in the event of our premature death. If we are successful, and our heirs are looking at inheritance taxes, life insurance is a fantastic solution. For cents on the dollar, money shows up, tax free, just when they need it to pay Uncle Sam.
Sometimes, it happens that people get divorced and life insurance is a component of the settlement. Remember it exists to indemnify someone for an economic loss if there is an unexpected death. Sometimes it is used in a business context, where there are more than one owner of a business, and the survivors suffer an economic loss if someone dies unexpectedly. Sometimes, the bank where you have borrowed money wants an insurance policy on the life of a borrower since they may suffer an economic loss if there is an unexpected death.
Like many concepts in the modern world, life insurance is not immune from the advance of technology. We are writing life insurance policies today for people who twenty years ago would have never been considered for life insurance. We are finding ways to reduce premiums or increase coverage for the same premiums that would have never been realistic twenty years ago.
If you have not reviewed your life insurance coverage lately, you owe it to yourself to have a checkup. We are eminently qualified to do this for you. There is no charge; if we can help you get a better deal, we will be properly compensated.