Insurance Does Two Things

People think strange thoughts

  • Insurance is too expensive
  • Life insurance is like betting against the home team
  • Any other investment would be better
  • My business is worth enough for my family to get along
  • I didn’t have much to start
  • I don’t want to think about it.

By any reasonable standard they sound more like excuses.

What does life insurance do?

Forget about what it is. Time for that later.

What it does is simple. It creates a bank deposit to deal with liquidity or asset needs in an estate. It protects assets that exist from liabilities that arise at death. Like taxes and loans.  Or it replaces assets that cease to exist at death. Like a career.

Replace or protect.That’s it. Just two things.

The form of insurance

The considerations are:

The quantum.

  1. Pay debt. Pay taxes.
  2. Pay expenses.
  3. Provide capital for family. Buy/sell. Equalize estate. Charity.

The duration of the need.

Forever is a different problem than paying off a loan that will be gone in ten years. Forever has a higher price as you would expect.

Affordability.

Most people have larger needs when they are young. But have little capital. There is a form for that.

Just do it.

Life insurance is just a tool to provide predictability about the future. It is common sense. Remember the fundamental purpose. Protect or replace. You won’t have much trouble understanding it after that.


I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have 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. don@moneyfyi.com 705-927-4770

One Comment on “Insurance Does Two Things

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