Life Insurance - a Wise Decision

Two of our realities that can't be denied or ignored are that we will get older and we will die. For fear of sounding morbid, our approaches to these truths generally fall into one category or another: we either leave it to those whom we leave behind to fend for themselves or we spend some energy and consideration in providing for them in our absence.

Life insurance is one of those products that is representative of those two positions. Those who subscribe to the wisdom of life insurance (generally) believe in preparing for their deaths with respect to and for the people who survive them. For the rest, the theory of "let them take care of themselves" prevails, for a variety of reasons.

Having been associated with the life insurance industry for some years, I have developed a staunch advocacy for the concept and the product. Regardless of the type of life insurance you select, it's almost always a great idea. The younger you decide to provide for your family or others who are important to you, the better the idea.

There are two reasons for thinking about life insurance when you're young: You have a greater chance of passing the physical and the rates are very, very low. Whether you decide on term or permanent insurance, you can generally buy a substantial policy for very little money. And unless you're suffering from diabetes, rheumatoid arthritis or some more serious or degenerative disease, you're very likely to qualify and pass the physical.

For fear of providing too little information on a somewhat complex product, the primary difference between term and permanent life insurance is that term is designed to last for a period of time, often ten to forty years. At the end of that period, the insurance goes away and has no value whatsoever. The chance that you're taking is that you'll survive it. If you do, then you congratulate yourself on your tenacity. If you don't, the death benefit is passed to your beneficiary or beneficiaries.

By comparison, permanent life insurance does not expire, regardless of when you do. It will cost more than term life insurance (because it does not end) but it has additional advantages. Policies often have a savings portion that can grow a cash value and be used as a savings fund, to pay for college education or emergency medical expenses. This cash usually grows on a tax-deferred basis so you won't have to pay taxes on the earnings in it for as long as you continue to pay premiums and keep the policy in effect. Whether you elect whole or universal life (and there are variations within those categories), this can easily be considered an investment for you as well as for your beneficiaries.

Along the way, I've encountered a selection of opponents to life insurance. One theory is that if I've done a responsible job of assembling my portfolio, my heirs will never have to worry about anything. The problem with that theory? Very often, there will be complications with inheritances, including ceilings on inheritances, required minimum distributions and beneficiaries who don't know a certificate of deposit from a washing machine warranty. When you consider the value implicit to life insurance, it seems absurd to think that life insurance would equate to excess.

Another objection I've heard sounds like: I've worked all my life to amass a portfolio - let them get theirs. No good response to that exists other than, "what are you going to do with it once you're gone?". If this is your position, do someone a favor, even if it's the state or county in which you live. Make some sort of plan for your burial or cremation. Final expense policies are easily identified and funded and do just that - they make certain that you will be buried or cremated according to your wishes.

And one more objection to life insurance - I have no-one to whom I want to leave anything. Assuming that you have the money to assign to life insurance in the first place, leave it to a charity or non-profit organization that is dedicated to a cause in which you believe. Proportionate to the investment, life insurance is inevitably a great bargain with respect to amount paid versus amount received. Proceeds from life insurance policies are non-taxable and can be important legacies to an entity for which you have worked or in which you believe.

Be confident that there are numerous ways to investigate life insurance to make a wise decision. If term life is your option, you can easily and quickly get quotes on the internet and move forward with it immediately. If your family is involved and you want to examine the investment options and alternatives, call and set an appointment with a life insurance consultant. You know the names of the biggest and best - my recommendation is to stay with a known commodity with reputation for continuity and integrity.

Clearly, I am a strong proponent of life insurance. I have known many lives that would have been improved if their loved ones had spent the time and money to embrace life insurance, not only to have provided them peace of mind but also to know that they had left a secure and judicious legacy.