I know we’re American and believe that we not only ought to have our cake and eat it too, but it’s time the breadwinners of the country get a grip and allow that things don’t always go our way.

I’ve talked before about what constitutes a need for life insurance, essentially being any time your death would cause a financial hardship on your family, another person or even a bank. Even though the vow was until death do you part, the obligations and responsibilities really go beyond that. Yet so many people will put off putting truly needed life insurance in force because they didn’t get the rate they wanted.

I had a talk with a client a few days ago about whether he really needed the life insurance he applied for. He was having some buyers remorse even though the insurance was going to cost what we originally quoted. Even though he had been advised by his estate attorney to get a large permanent life insurance policy for estate tax reasons, once the policy was approved he decided maybe he would revisit any other options he has to downsize his estate to get it below the exemption limit. We reviewed all of the things he was looking into and it was, best case, going to take 2-3 years to implement the alternate plans.

I told him that I was offering him the same advice as a guy who applies for insurance and when he finds out he’s got high cholesterol, well, he decides to wait until he gets that under control. It’s like this. There is a need for the life insurance and that need doesn’t go away just because you don’t like the price. My recommendation is always to put whatever you can budget in force until you have the issue (cholesterol, estate management) under control and then reapply for a lower cost policy to replace it. In the situation with my client and his estate the recommendation would be to put the life insurance in force and keep it in place until the estate rebuilding is done.

Given some time a good estate attorney can reduce the size of a taxable estate through gifting and creative use of trust ownership of assets. But it takes time. One of the things my client said he did was to move some current life insurance he owns into an irrevocable life insurance trust. That’s an appropriate move but won’t help his estate for 3 years since the IRS has a 3 year look back at any life insurance ownership changes. Each item he brought up was something that takes time and in a lot of cases money, as in gifting. As much as he would like not to buy the life insurance, it doesn’t change the fact that for at least 3 years he needs it or his heirs are going to be hit hard if he dies prematurely.

Bottom line. Whether you’re fat or your estate is fat, you need to bite the bullet and do all you can financially with life insurance to meet your obligations. You didn’t work so hard raising a family only to leave them broke and you didn’t work so hard creating a legacy only to have the government take it away.