MANY busy professionals and business owners automatically “raise shields” in defence against sales pitches on life insurance made by acquaintances and sometimes even strangers.
Sales pitches on life insurance made by acquaintances and sometimes even strangers.
I do not know your specific circumstances so I cannot give you customised, tailored advice. Nonetheless, in my professional opinion as a Securities Commission-licensed financial planner who is NOT trying to sell you an insurance policy, your family may be thankful if you take this opportunity to familiarise yourself with three insurance truths that will help you separate the wheat from the chaff the next time a life insurance agent comes knocking on your door:
AN insurance policy hinges on the buyer’s desire for risk transference;
LIFE and general insurance policies can provide us with the bulk of our initial Wealth Protection requirements; and
DISTINGUISHING between a less than ideal and an excellent life insurance agent is vital.
RISK TRANSFERENCE
We are born, we live, hopefully in great health for a long time, and then we pass away. That is the path of all life.
Phases one and three of our journey are certain. Phase two is not!
Our health may not be perfect and our exact lifespan — short, medium or long — is known only by God.
That is why people are always devastated when a catastrophe, such as death or total permanent disability, hits their family.
While on aggregate the length of an average human lifespan grows with each generation, nothing is guaranteed for the individual.
Therefore, since we don’t know when we might die or become completely disabled, most of us should use one of the most remarkable inventions of modern finance: personal risk transference through a life insurance policy offered by a robust corporation known as an insurance company.
Chinese and Babylonian traders have used general insurance mechanisms for more than 3,000 years to mitigate the risks of transporting goods across vast distances. In contrast, life insurance has been around a scant three centuries because its advent had to wait for the development of human mortality tables and statistical analysis based on the law of large numbers.
The first life insurance company was established in London in 1706. It boasted the cumbersome name Amicable Society for a Perpetual Assurance Office!
Today, wise individuals who are ascending the personal wealth curve use life insurance to mitigate their risk of dying before they become self-insured.
The purpose of such policies is to provide an immediate estate upon death (or upon total permanent disability) to help meet the economic needs of family members — most notably a spouse, parents and children — in the absence of the breadwinner.
WEALTH PROTECTION
A complete financial plan should have three dovetailing dimensions — Wealth Protection, Wealth Accumulation and Wealth Distribution.
The main instruments for Wealth Protection are life and general insurance policies.
Focusing on life insurance, remember that when a loved one passes away, time can heal the emotional anguish, but only money can compensate for the loss of a breadwinner.
Unless you have been left a large legacy or built a healthy nest egg through decades of saving and investing, the most cost-effective way of almost instantly generating wealth for those you leave behind is through the wise use of a life insurance policy.
SELECTING THE RIGHT LIFE INSURANCE AGENT
The key role of a competent, ethical life insurance agent is to provide guidance in this vital matter.
Therefore, if you are a primary breadwinner who is not yet fully self-insured, you should seek a professional who is focused on serving your needs in a cost-effective manner.
In my opinion, the best way to ferret out such an agent is to ask your friends and family for word-of-mouth recommendations.
After those are forthcoming, quiz your potential agents with this revealing question: do I have too much or too little life insurance?
Scrutinise their answers and resultant recommendations. Then act!
Article Source: NST
Photo Source: http://cdn.moneycrashers.com/wp-content/uploads/2012/04/whole-life-ins2-edit.jpg
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