3 Thoughts About Life Insurance

-???????“Life insurance is a rip-off.” ?

-???????“Never buy cash-value life insurance.”

-???????“Don’t trust anyone who SELLS life insurance.”

-???????What’s the truth about life insurance . . . and salespeople???

-???????3 Facts You Need To Know:

1.????Insurance is Sold, not Bought!

One important part of financial planning is ‘Risk Management’, though it really should be called Risk Financing, as it’s actually all about insurance.?An entire CFP course and 12% of exam questions involve risk management, according to the CFP.net website. ?Early in my career, I heard someone argue that “Insurance is sold – not bought! . . . Yes, companies pay big commissions . . . because people don’t go out of their way trying to buy insurance!?They buy cars and boats and clothes, but not insurance!?They have to be told that they need it, convinced that it’s necessary, it’s unavoidable, then pushed to ‘get it done’!”?

Allow me to share two real life stories:

For about 4 years, my client Robert kept putting off my offers to help him get a term life policy.?He was self-employed, uninsured and made about $50,000 per year, while his wife had plenty of life insurance through work to protect her $60,000 salary.?I persisted until finally, I got thru to Robert and he paid around $560 a year for a $1M term life policy.?Three years later, at age 45, a massive heart attack took his life.?Over 300 people came to the funeral, but I was the only one able to replace his earnings for the next 25+ years for his young wife and 3 children.?I had sold Robert!

2.????It’s true for the rich and the poor!?

I met at Redskins (now Commanders) Park with representatives of Jack Kent Cook, then owner of the Washington Redskins.?A team of insurance home office big shots and I were recommending Jack pay $20M a year to purchase a $300M life insurance policy for estate tax planning.?The policy would have an increasing face amount (the accumulating cash value would be added to the original face amount).?It was around 1993.?We couldn’t close the deal. ?Jack died in 1997.?The estate tax bill, due 9 months later was roughly $300M.?The policy would’ve cost $80M over that time, and paid his heirs $340M tax free.?His son John Cook, who had run the team for the last 5 years, was forced to sell.?Dan Snyder has owned the Redskins ever since.?Jack Kent Cook wasn’t sold!

3.????Investment Advice is NOT a Financial Plan.

A financial strategy that doesn’t include insurance recommendations is not a complete financial plan.?And a financial plan that recommends insurance that never gets implemented is a FAIL.