Here’s a partial chapter titled Plan B for Back-Up from my book, The Life Insurance Marathon, where I discuss what life insurance is, and what it is not. Enjoy!
Plan B for Back-Up
Have you ever tried to put your finger on a ball of liquid mercury? Good luck! It will elude you every time. The harder you try, the more frustrating it becomes. Life insurance can feel like that. The more information you gather, the more confusing it becomes. This chapter will help you understand the simplicity of life insurance as a concept. Once you understand the simple concept, the confusion will melt away, and you’ll be in a much stronger position to make a wise product choice. Many life insurance agents describe the products they sell in surprisingly optimistic and amicable terms, such as:
- A promise
- An investment
- A supplemental retirement plan
- Your own personal bank
- A gift
- A legacy
There are many other gimmicky descriptions, and frankly, none of them is accurate. This is just a sales technique, used to idealize the product and stimulate the conversation between the insurance professional and you.
Remember this: life insurance is a legal contract — between you and a huge life insurance company that can easily afford to pay your death benefit. If the contract is guaranteed, and you fulfill your obligation to the contract by making all of your premium payments, then the life insurance company must fulfill its obligations to you by providing your beneficiaries with all of the guaranteed benefits you purchased. If, on the other hand, the contract is non-guaranteed, then under certain conditions, the life insurance company is not required to fulfill its original obligations to you, even if you pay every penny you initially agreed to pay. In the insurance industry, a contract is called a policy. (I recommend you take a few minutes to re-read this paragraph to ensure you fully understand it).
Always purchase guaranteed life insurance. Never purchase non-guaranteed life insurance.
Once you begin to understand life insurance, you can take steps to properly protect your loved ones. It’s much easier than most people think!
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