Life insurance offers a sense of security for families and business owners. It can alleviate financial worries and allow the focus to be on emotional healing in a time of immense grief. Each September, as we celebrate Life Insurance Awareness Month , I reflect on how life insurance has affected my clients and me throughout my twenty-year career as a financial planner.
I’ve been there myself
My own experiences help me address my clients’ concerns. The main reason I entered the financial planning business was my childhood. My parents were fiscally conservative, and my father was proud of the fact that he lived within his means. He routinely would say, "I'm sorry, we can't afford that." — It was one of the best lessons he taught me.
Unfortunately, my father passed away from colon cancer at 48. Shortly after his funeral, my mother cried as she asked me, “What am I going to do? Your father always handled the finances.” Although I knew nothing of their financial resources, I told her I was certain of one thing — the man who taught me the value of a dollar surely took care of my mother.
We discovered that my father indeed had a reasonable amount of savings and life insurance. This gave my mom the opportunity to focus on herself without the burden of financial concerns. And now, more than 25 years later, she is retired and financially independent.
Benefits business owners
A large part of my practice is focused on helping business owners with their retirement, business succession and estate planning needs, as well as key employee reward and retention programs.
Life insurance death benefits play an important role in business planning. For example:
- Assuring banks that debts may be paid off if something happens to one of the primary partners,
- Providing a cushion to keep the business running, especially if the decedent had primary responsibility for business development and maintaining relationships with customers, or
- Ensuring surviving partners that they will have the money to buy out a deceased partner’s family. Few business owners want to be partners with a decedent’s spouse or children.
Need vs Desire
There’s a difference between the need for life insurance and the desire for life insurance. Clients purchasing life insurance for the first time often ask, “How much do I need?”, “Do I really need it?”, “What kind do I need?” They want me to demonstrate how it works and why it is important for keeping wealth in their families. I provide examples of how life insurance has benefited others, including myself.
As time passes and my clients become financially independent, however, the focus often changes. Financial planning tools may demonstrate that they don’t really need coverage any longer. But they don’t want to give it up, and some even buy more. They’ve grown to appreciate the peace of mind and comfort knowing that if something happens to them, additional resources will be available so the people or entities they love will be ok without them.
About the author
Laura Teter, CPA*, CRPC
Laura Teter is an Advisory Representative offering securities and advisory services through Lincoln Financial Securities Corporation, Member SIPC. Branch Office: 1010 North Elm Street, Greensboro, NC 27401. Advisory services offered to residents of NC. Investments offered to residents of FL, IL, MI, NC, SC and VA. Lincoln Financial Securities and Pilot Financial Advisors are not affiliated. Lincoln Financial Securities and its representatives do not offer tax or legal advice. You should consult your individual tax or legal professional regarding your individual circumstances.
*Licensed, not practicing.