Life Insurance as a Life Solution
Life insurance-based solutions abound because life insurance is a real-time, affordable way to ensure that a meaningful amount of money is available at critical times. Provision through life insurance is the difference between achieving and failing to realize favorable financial outcomes in myriad situations.
The Protection Equivalent of the 15-Year Mortgage
A 30-year mortgage has lower monthly payments than an equivalent 15-year debt security. However, the total interest paid over 30 rather than 15 years is much greater. A little more outlay per month produces a significant financial benefit over the long term. A similar concept applies to providing needed life insurance protection. People who have people, enterprises, or passions that rely on them financially are strongly advised to have life insurance. Those who have large or temporary commitments and limited funds should utilize sufficient term insurance rather than failing to secure any or adequate coverage. However, just as with a 15-year mortgage, they should pursue return of premium (ROP) term insurance if they can otherwise afford the coverage amounts they require even though the monthly outlay is greater than for the same amount of pure term insurance. ROP term life insurance provides the necessary protection just as a 15-year mortgage delivers the required funding. Both cost more annually than the straight term and 30-year alternatives. However, both produce greater financial benefits over time. The ROP term provides a lump sum return of premiums through building policy values, while the 15-year mortgage's faster pay-off accelerates equity buildup in the house. ROP-enriched term insurance also provides policy holders with additional motivation to keep their protection in force.
Life Insurance as a Multi-tasking Commitment Device
Life insurance has been called a forced savings mechanism. Yet this characterization does not adequately describe how life insurance facilitates the achievement of multiple financial purposes. Economists describe a commitment device as a means through which people lock themselves into doing the things that are required to bring about desired results or to reach a sought after objective. Systematically repaying money borrowed to purchase a house through regular mortgage payments eventually leads to owning a home. Payroll deductions for 401(k), U.S. savings bonds, or other regular deposits accumulate savings. Unlike other commitment devices that focus on a single goal, life insurance helps achieve multiple financial objectives. Through set premium payments made at regular intervals, people protect their families and businesses, fund the continuation of their passions, and accumulate assets for their use during life.
Living Well and Leaving a Legacy
Increasingly, people are agonizing over how to make the assets they’ve accumulated over their working years become distributions that will provide for them in their preferred lifestyle for the remaining years while still having something meaningful to pass on. Life insurance eases the burden on those who desire to live well and then leave meaningful legacies. It enables people to set legacy amounts with certainty while avoiding having to allocate and preserve the resources from their accumulated assets. They’re able to fund these legacies through scheduled, budgeted outlays that are a small percentage of the ultimate payout. They also gain an ultimate safety net through the availability of policy cash values, accelerated death benefits, and life settlement options in the event of a catastrophe.
The Protection Equivalent of the 15-Year Mortgage
A 30-year mortgage has lower monthly payments than an equivalent 15-year debt security. However, the total interest paid over 30 rather than 15 years is much greater. A little more outlay per month produces a significant financial benefit over the long term. A similar concept applies to providing needed life insurance protection. People who have people, enterprises, or passions that rely on them financially are strongly advised to have life insurance. Those who have large or temporary commitments and limited funds should utilize sufficient term insurance rather than failing to secure any or adequate coverage. However, just as with a 15-year mortgage, they should pursue return of premium (ROP) term insurance if they can otherwise afford the coverage amounts they require even though the monthly outlay is greater than for the same amount of pure term insurance. ROP term life insurance provides the necessary protection just as a 15-year mortgage delivers the required funding. Both cost more annually than the straight term and 30-year alternatives. However, both produce greater financial benefits over time. The ROP term provides a lump sum return of premiums through building policy values, while the 15-year mortgage's faster pay-off accelerates equity buildup in the house. ROP-enriched term insurance also provides policy holders with additional motivation to keep their protection in force.
Life Insurance as a Multi-tasking Commitment Device
Life insurance has been called a forced savings mechanism. Yet this characterization does not adequately describe how life insurance facilitates the achievement of multiple financial purposes. Economists describe a commitment device as a means through which people lock themselves into doing the things that are required to bring about desired results or to reach a sought after objective. Systematically repaying money borrowed to purchase a house through regular mortgage payments eventually leads to owning a home. Payroll deductions for 401(k), U.S. savings bonds, or other regular deposits accumulate savings. Unlike other commitment devices that focus on a single goal, life insurance helps achieve multiple financial objectives. Through set premium payments made at regular intervals, people protect their families and businesses, fund the continuation of their passions, and accumulate assets for their use during life.
Living Well and Leaving a Legacy
Increasingly, people are agonizing over how to make the assets they’ve accumulated over their working years become distributions that will provide for them in their preferred lifestyle for the remaining years while still having something meaningful to pass on. Life insurance eases the burden on those who desire to live well and then leave meaningful legacies. It enables people to set legacy amounts with certainty while avoiding having to allocate and preserve the resources from their accumulated assets. They’re able to fund these legacies through scheduled, budgeted outlays that are a small percentage of the ultimate payout. They also gain an ultimate safety net through the availability of policy cash values, accelerated death benefits, and life settlement options in the event of a catastrophe.
