9/11 & Never Forgetting our “Why”
September 11th is a somber time for Americans and it is one of those life changing events which we will never forget where we were and who we were with. Personally, and professionally, I know people who were affected that day in an instant, losing loved ones in the towers and as a result changing their lives forever. Losing a loved one is not only emotional devastating but it can also bring about significant financial challenges. Dealing with the stress, grief, and mourning of a loved one is difficult at any age but when a worker’s death occurs prematurely, the impact on a family can be even more daunting. Fortunately, a well-managed and proactive estate plan can alleviate significant relief on the financial side and this process is a perfect opportunity to review our “why” in life.
Our “why”, or purpose, is typically what fuels us. For Michael Jordan, he had a burning passion to consistently be the best at basketball and had a “whatever it takes” mentality. For others, a burning passion could be social work, the top earner at your company, supporting causes close to your heart through philanthropy, or consistency showing up and being the best mom or dad for your family.
September is life insurance awareness month and a recent study from Forbes mentions that 44% of American households would encounter significant financial difficulties within half a year if they lost the primary wage earner in the family, and 28% would reach this point in only a month. This is not only shocking but alarming.
Why do almost half of those American households who work extremely hard to provide on a daily basis for their family (their “why” in life) risk their family’s success/security if something were to happen to them? What is the disconnect? Are they afraid of the doctor or results? Unable to afford insurance? Unclear of the entire process? Not educated or informed of any “what-if” scenarios from an untimely passing?
Regardless of the reason, please understand you are never alone and a topic of discussion which we’re happy to assist and help you navigate. Life insurance should serve a particular purpose specific to your individual situation. It simply requires a conversation and you can defer the leg work to us.
Who May Need Life Insurance? Below are a handful of examples but not limited to:
- Parents with minor children and/or Special Needs Adult Children. If a parent passes, the loss of their income or caregiving skills could create a financial hardship. Life insurance can make sure the kids will have the financial resources they need until they can support themselves. For children who require lifelong care and will never be self-sufficient, life insurance can make sure their needs will be met after their parents pass away. The death benefit can be used to fund a special needs trust that a fiduciary will manage for the adult child’s benefit.
- Adults who own property together. Married or not, if the death of one adult would mean that the other could no longer afford loan payments, upkeep, and taxes on the property, life insurance may be a good idea. One example would be an engaged couple who take out a joint mortgage to buy their first house. If not, this may force the surviving partner to sell the home.
- Wealthy families who expect to owe estate taxes. Life insurance can provide funds to replace wealth lost to transfer taxes and keep the full value of the estate intact. Taxes can vary from 0% to 40% at the Federal level and may or may not be applicable depending on the state in which you reside.
- Children or young adults who want to lock in low rates. The younger and healthier you are, the lower your insurance premiums. An adult in their 20’s may buy a policy even without having dependents if there is an expectation to have them in the future.
- Stay-at-home spouses. Stay-at-home spouses should have life insurance as they have significant economic value based on the work they do in the home.
- Businesses with key employees. If the death of a key employee, such as a CEO, would create a severe financial hardship for a firm, that firm may have an insurable interest that will allow it to purchase a life insurance policy on that employee.
- Seniors who want to leave money to adult children who provide their care. Many adult children sacrifice time at work to care for an elderly parent who needs help. This help may also include direct financial support. Life insurance can help reimburse the adult child’s costs when the parent passes away.
The purpose of this article is not to persuade anyone into buying life insurance, but rather to educate and bring additional awareness to your existing situation and pair that awareness with your life purpose of “why”.
Keeping on the basketball analogy – back in the 80’s when the “Bad Boy” Detroit Pistons were dominating the Eastern conference, a scrawny Michael Jordan would leave each game physically exhausted with cuts, bruises, etc. The infamous Jordan rule was to physically take down (hurt) Michael Jordan every time he was heading up for a basket. After consecutive losses and reaching a breaking point, Jordan was very well aware of his current situation. It made him uncomfortable to sit down and review the losses, what worked, what didn’t work, etc. Instead of making excuses for the Bulls organization, he hired a trainer, Tim Grover, who increased his size, strength, and mental toughness. Think of Michael Jordan as you (the client) and Tim Grover as your ACM Advisor. Michael paired his uncanny awareness with his “why” and there is no reason that you can’t do the same.
If you would like to begin the conversation or have any questions about your potential blind spots, please do not hesitate to reach out to your ACM Wealth Advisor.
Source: https://www.forbes.com/advisor/life-insurance/life-insurance-statistics/
Advisors Capital Management, LLC is an investment advisor registered with the United States Securities and Exchange Commission. Registration does not imply any degree of skill or training. All investing carries risk, including the potential for the loss of principal and past performance is no guarantee of future results. This content is for informational purposes only, can change at any time without notice, and is not investment advice or a recommendation to trade any security. Indices are not available for direct investment. We only provide services in jurisdictions where we are registered. Our disclosure brochure (ADV Part 2A) and customer relationship summary (ADV Part 3) are available at https://adviserinfo.sec.gov and upon request.
