In the May 2009 issue of Wealth Manager Warren Buffet was quoted as saying, “It’s only when the tide goes out that you learn who’s been swimming naked.”

That couldn’t be more true when it comes to this past year’s economy and those who didn’t use life insurance to manage or protect wealth. There is a point when self insurance makes sense, that point when protected wealth reaches a point where life insurance is redundant for personal purposes.

One of the challenges is that this somewhat blurred point in time also happens to coincide with the need for life insurance for estate preservation from estate taxes.

But, to be sure, a lot of people in all ranges of financial accomplishment have simply missed the obvious boat during this recession, and because recessions can happen, life in general. A financial plan needs a backup. Something needs to stand between your life savings and disaster and that something is life insurance.

When things started to unravel last fall and it became obvious that retirement funds were going to take a beating I recommended that, at the very least, people consider putting a substantial 10 year term insurance policy in force as a way to ride this financial dip out. A lot of people took that advice knowing that if things bounce back with a bang they can always drop the insurance, but if something unforeseen happens, the retirement you worked so hard for won’t be stripped away from the spouse you’ve left behind.

Bottom line. Assuming their won’t be ups and downs in the investment world is not a financial plan. Again, there has to be something that takes your exposure to risk to a lot lower level.