By Jack Bobo
Estate planning, sometimes called financial planning, can be divided into two broad categories–estate creation and estate conservation. The logic of life insurance in both categories is undeniable.
Absent a winning ticket in the lottery or a substantial windfall from an inheritance there is no other way to create an estate immediately, and waiting for either of these events can be hazardous to your estate planning. Only with the stroke of pen on a life insurance application can one immediately put in place a substantial estate for the benefit of a person’s family or business.
Equally compelling is the role life insurance can play in conserving a complicated estate that may have taken a lifetime to create. A family business or a farm may be preserved intact for the heirs because insurance proceeds were available when the tax people and creditors came calling. The logic is there, but it is not always persuasive enough to secure action. Many times the nuances associated with estate planning dominate the process, causing action to be delayed or forgotten altogether.
Dealing with the subtleties associated with the estate planning process is where the role of the agent becomes indispensable. It is what separates the agent from the order-takers. It is not something that can be done “online” or by mail; it is an interpersonal process. A review of a few of my own experiences in the field wherein I helped people achieve a reality check will, I believe, illustrate the point.
The purchase of cash value life insurance not only creates an immediate estate for the policy owner but is also a valuable saving tool to build an estate for other uses in the future. The value of the savings element is often disputed by prospects on the theory that there are more productive places they can put their money. I can remember a number of people about age 45 using the argument to defer action. On such occasions I usually asked the question, “How much have you saved so far?” Invariably the answer was zero. I then reminded them that they had 240 paychecks left before age 65 and retirement, and that 240 times zero equals zero. In most cases that was enough of a reality check to at least start a discussion about savings that was long overdue.