Since 1992
Print and digital marketing
By Jac Arbour
The great Ben Feldman once said that life insurance is designed to do only one thing: create cash. However, cash is king; in times of greatest need, cash can be used for anything. With this in mind, let’s look at the top reasons why people, business owners, and companies should own life insurance.
1. Life insurance proceeds can be used to eliminate debt. When a person passes away, most debts do not disappear; they remain and must be paid. You can eliminate such debts, for pennies on the dollar, with life insurance proceeds, which are tax-free also.
2. Life insurance proceeds can be used to replace lost income. When a person passes away, their surviving loved ones may still need the income that family member earned. Life insurance can guarantee replacement of this income and continuity of lifestyle for loved ones.
3. Leave a legacy. Naming a person or a trust as the beneficiary of a life insurance policy can ensure that loved ones receive the desired benefits of the insured. The use of trusts can enhance loved ones’ ability to access cash funds from the life insurance policy for education, health care, weddings or birthdays, and so on. To create a trust, you’ll want to speak with an estate planning attorney.
4. Company-owned life insurance can create a guaranteed marketplace for the shares of the deceased via the use of what are known as “buy/sell agreements.” These legal agreements guarantee the sale of shares at predetermined values, and the life insurance policies serve as the funding mechanisms that create the cash needed for the transition of ownership.
The list goes far beyond these four ideas, but hopefully they get your wheels turning. Feldman is still correct: life insurance does one thing and one thing only — it creates cash. The question is, how much cash will your family or business need, and where will it come from?
Here is what I promise: Life insurance is one of the simplest ways to ensure continuity for most financial plans.
See you next month,
Jac Arbour, CFP, ChFC Founder and CEO
Jac Arbour is pesident of J.M. Arbour Wealth Management. He can be reached at 207-248-6767. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
