Every person should own life insurance regardless of whether you have a family, or are independently wealthy.
Why? Because unlike any other financial instrument ever devised by man, life insurance allows you to do this: (1) Pass money to your beneficiary, (2) immediately upon your death, (3) and… by costing less money than what the amount of life insurance will actually pay out. For example, let’s say you are an unbelievably wealthy 80 year old and you want to pass on $1,000,000 to your heirs upon your death.
Whatever the cost – or premium – for a $1,000,000 policy might be, I can guarantee you this – it will cost you LESS than $1,000,000! Not only that, but when your heirs receive that $1,000,000, it will transfer to them entirely income tax free! That’s why the super affluent generally own life insurance policies of $20 million, or $50 million, or even hundreds of millions.
I’ve actually worked with a firm that specializes in providing life insurance solutions to people who are worth between $100 million and $2 billion. OK, so much for the wealthy. Let’s get back to real people like you and me. What if you are married and the primary bread winner with a family of 2.6 children, 1 cat, 2 dogs, 3 hamsters and a goldfish? You have a mortgage and a job.
BUT… you are really struggling to make ends meet - and feed your kids and their zoo? Should you still buy life insurance? ABSOLUTELY! Because if you were to take off to heaven today, your employer would stop your paycheck. You would need enough money in the bank to pay off your mortgage and at least fund the family’s needs until the children reached adulthood.
The apostle Paul writes to Timothy the following strong admonition, “If anyone does not provide for his relatives, and especially for his immediate family, he has denied the faith and is worse than an unbeliever.” Ouch. That’s pretty straight forward. So, now we come to the part of the life insurance puzzle that gets some people all animated and upset. And that is the question of whether to use term insurance or permanent insurance to fund your life insurance needs. Well, the logical and irrefutable answer is found in using a calculator, the Internal Revenue Code (in other words, tax law), and your own cash flow and financial situation.
Bottom line – if you have a big need for a large amount of life insurance and you don’t have much money – buy term insurance – as much as you can afford for as long as you can. On the other hand, if you have enough money, I highly recommend at least a portion of your life insurance be in the form of permanent insurance. Here’s another way to look at it – the word “term” as in “term insurance” means – for a period of time. So, as long as you know for sure that you will die during the period of time that your “term life insurance” remains in force, well then - you don’t have any need for permanent life insurance.
But, if you are like the rest of us – and I know I am – we really don’t know when we will be taken to heaven. Only God knows that and he generally doesn’t tell us at all, or certainly not years in advance. Consequently, a prudent person would be on the safe side and have permanent insurance in place. One final thought. ALL of us should be in the mind set of giving to the kingdom; not just from our cash flow on a monthly basis, but also from our net worth.
If every Christian were to tithe 10% of his net worth to their church or ministry, there would be a huge, immediate and sustained growth in the ministering of the Gospel. And what is the most efficient and least expensive way to get that 10% of your net worth to your church or ministry immediately upon your death? That’s right – life insurance.
So, next time you hear someone say something like “everyone should always only buy term insurance” just remember that concept is just a myth… that got busted!