David H. Kinder, RFC®, ChFC, CLU
Excuses #2 - Eh... too many and too quick to respond
Updated: Jan 18
Some of these are laughable, but I'll address them quickly.
"I'm wealthy. The last thing I need is life insurance and "I own properties"." The wealthy buy the largest policies for a multitude of reasons. This unnamed billionaire bought a $201 million policy. Here's the thing: it couldn't be for estate taxes... because assuming he's worth $2 billion... and taxes are 50%, then he'd need $1 billion to cover the taxes. This policy alone wouldn't do the job. (Doesn't mean there aren't other policies in force, just that it couldn't have been purely for estate tax purposes.)
As for owning properties, if these properties are part of the total estate and exceed the estate tax exemption, then the IRS needs to be paid in cash within 9 months of death. You've got to find a way to convert property into cash. Yes, you could sell them, but what if there was a smarter way?
"Life insurance is betting that you're going to die."
Last I checked... everyone is going to die. The question is how and when. No one has a lease on life that can be renewed whenever you wanted to. And to bring in a little religion - Christ died and rose on the 3rd day... but He still died.
This is purely a denial of facing one's true mortality. We're all going to die, but have you considered the consequences to your family based on the planning you have done so far? Would the be okay? Or would they have to do a "GoFundMe" page?
"I have online business fully automated. This will provide the income even if I'm not there."
Every business needs to be maintained and adjusted as the marketplace changes. Otherwise, that business will become outdated if they don't continue to reinvent themselves over time. This is just another denial OR a lack of some business sense about the viability of their fully online business.
"It seems expensive."
Short-term? or Long-term?
"I'm not married and don't have kids, so I don't need it. If I have zero dependents, why do I need life insurance? Prefer to put that money into a 401(k)."
Lots to talk about here. 1) Do you WANT to be married with children one day? Health is a fickle thing and securing insurance in advance is a way to preserve your insurability. It can also be just as sexy as your credit score when dating! (That's a joke, but it couldn't hurt to show your responsibility!)
2) Regarding putting the money in a 401(k) instead - what if something happened to you and you couldn't work? Would the money continue to be contributed to your 401(k) plan? Would you like it to? It won't happen, but with disability waiver of premium, your contributions can continue to be paid even if you're disabled and can't work! Would you like to insure your financial plan whether you die too soon, live too long, or become disabled and can't work? "I'm self-insured."
Oh, so you're retaining the risk on a dollar-for-dollar basis? But wouldn't it be smarter to transfer the risk to an insurance company for pennies on the dollar per year? Wouldn't this let you use more of your money by leveraging the insurance company's dollars?
In addition, what if YOU could be the primary beneficiary of your life insurance policy to use while you're still alive? There are multiple ways to do that. One way is to use the policy to give yourself 'permission' to spend more of your assets and enjoy more of your money during retirement. That's just one way to use leverage to enhance your financial planning. https://www.davidkinderfinancial.com/post/2018/10/08/using-life-insurance-as-a-permission-slip-to-spend-down-other-assets
"My spouse can get remarried."
Is that what you REALLY want to have happen? (Does she know that?) Do you want your widow to be financially forced to remarry... or would you want it to be her choice?
If I hear any more, I'll create another post.