There has been no lack of financial “wisdom” floating around since our economy skipped right past recession and into economic meltdown. The Suze Ormans and Warren Buffets and Dave Ramseys have all espoused the time tested “don’t freak out and eventually your money will come back” philosophy, or the “this is a great time to buy” philosophy.
Personally I believe those are both true. I think the economy will come back and if I had any extra money right now I might very well buy some of the blue chip stock that is selling at hysterical lows. But there’s a piece to the whole investment/retirement puzzle that they used to talk about a lot and they seem to have forgotten at a time when it is more important than ever, life insurance.
I’m going to paint a scenario that I think is pretty close to where most folks are right now. Some will be older and younger than this picture, but the basic premise is still sound.
My wife and I are in our mid 50’s and our income is sufficient to meet our needs most of the time. We’re self employed and had the start of a good retirement portfolio. That has been cut in half in the past few months.
The business is actually mine so I guess I would be considered the primary breadwinner. My wife works for me. If I died it is highly unlikely that she would continue the business. No different really than if I had, as my mom likes to put it, a real job. If something happened to me my wife couldn’t step into that job and have the income continue.
So, as a breadwinner I have always carried life insurance. I don’t want my wife to have to sell assets and go to work somewhere where the employer isn’t as nice as me or where she doesn’t like the work. I want her to be comfortable and not lose anything from the lifestyle we have, modest as it is.
But, the life insurance I’ve been carrying has been based on the assumption that our retirement portfolio would continue to grow, not melt down. So, my advice to myself as a life insurance professional is to take out an additional policy, a ten year term in the amount of our retirement portfolio (in case the rest of it melts) and let financial nature run its’ course. If Suze and Dave and all the rest are right, the ship will be righted and all should be relatively stable within that 10 years. When the ship is solidly floating again I can drop the term insurance policy. If I die in during that period, recovery or not, my bride will have our full retirement tax free.
Bottom line. It’s times like this when we need to hold fast to things we can count on and a guaranteed term life insurance policy is dependable. It isn’t an investment, it’s protection. If you need it you don’t have to hope that it will be there. It will.
Just an aside. I was thinking about the about how frightening the whole financial scene has been and the eery resemblance to that famous short scene in the Wizard of Oz where another famous meltdown occurred. I wonder if she had life insurance?