Everyone knows a life insurance policy is a legally binding contract. On the one hand, the policy owner agrees to apply, qualify and pay premiums, and on the other, a large, regulated, financially-sound institution promises to pay a defined sum in the future to a named beneficiary. The insurance company has a long-term liability on its books – an obligation to pay a consumer so long as they hold up their end of the bargain. In short, it’s a financial contract and, like any other financial contract, it’s an asset.
Life insurance is also a financial tool which, if properly handled, can be used in a variety of ways to benefit its owner. In fact, there are so many ways in which life insurance can be used to benefit policy owners, it boggles the mind that so many people, in all walks of life, seem not to truly understand it. Throughout our careers in the insurance industry we hear things like “I don’t believe in life insurance” or “It’s only good when I’m dead” or “I’m self-insured so I don’t need it anymore.” None of these characterizations, when subjected to rational thought, hold water – not one.
Ask any beneficiary of a life insurance policy if the amount of the check was “enough”. They’ll admit, “I wish there had been more.” Ask any life settlor if the proceeds they received from selling an unwanted policy spend like their other money. Ask a retiree if they would prefer to be able to consume their savings a bit faster or sooner if they could be certain they’d have other assets to replace those they need to use now. With understanding and the right planning and perspective, life insurance can make these and many other things possible.
Although most consumers still think of life insurance as being so much different than their other financial tools, those who are properly educated by their advisors as to the features, benefits and utility of life insurance know better. All the misinformation and misdirection aside, the tangible benefits of owning life insurance and learning how to use it correctly are undeniable. Properly managed, life insurance is a claim check to fund your future needs and wants, a permission slip to live now and tomorrow. In short-it’s one of your most powerful assets.