It is pretty simple.
If I offered to buy out your career, how much would you want?
You could never work, be in business or help anyone else be in business. No lottery wins. no found money. Any taxes you have deferred will come due. You would pay some fees and other costs to do the deal.
So, how much?
How much life insurance do you have?
Obligations don’t go away when you do. Debts must be paid. Children must be educated. Living costs remain. The future income that everyone was counting on goes away with you. What replaces it?
Pretty much the same deal with sickness or accident. The mechanics are different but the need is similar. The one difference that matters is there may be some new expenses.
Businesses are harder still
It is a formidable challenge to have a business continue with the same profitability. None can be sold for the same value. Business owners do add value, after all.
Business owners have more obligations to work through. Personal like before, but add some bank financing, employees, customers, and suppliers. Maybe partners. Partners are at big risk if they have to buy you out at the value before you disappeared. Think it through, who replaces you?
Doing nothing has a price
It looks like a saving and easily achieved to pay no premiums. Own no insurance.
Dumb. You have missed the point. The value of the lost income is the cost. The insurance premium is the solution. Problems cost, solutions do not.
Some argue low probability. Again dumb. Sure, the probability of you dying is not high. Maybe 10% before retirement. The key is you cannot be 90% alive and 10% dead. It is either 100% alive or 0% alive.
0% alive can be financially ugly.
Life insurance lets you die neat
No one ever dies when everything is done. There are always loose ends. Money solves a lot of the problems.
Think it through.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. firstname.lastname@example.org 866-285-7772