We were at a dinner party recently with four couples, all in their middle years of life.
At one point, the subject of conversation somehow turned to life insurance.
Two of the couples stated that they were adamantly opposed to life insurance.
They were quite emphatic about the position that they just didn't believe in it.
I was quite baffled by this position.
My opinion is that life insurance is not something one believes in or not, like a religion.
It is a financial tool, an instrument that should be used appropriately and applied to solve future, probable financial problems.
I think it should be thought of no differently than a bank account, a stock portfolio or a mortgage, any other financial tool.
So why do people approach it with so much more emotion than these other commonly used financial instruments? One of the obvious possible answers to that question is, of course, the association that exists between life insurance and death.
Thinking about death conjures up emotion.
This is probably unavoidable.
But there is also the irrational fear that some people have that someone, somehow, inappropriately, will benefit from their death.
They don't like the idea of an industry, a sales agent, or even an undeserving relative benefiting from their demise.
Another fear is the Murphy's Law sort of syndrome - if I don't leave anything behind I may be around longer.
These attitudes are all nonsense, but unfortunately, they do exist.
There is also the attitude that having assets, such as property, will negate the need for life insurance.
People that think this way tend to overlook the financial problems they will create when they die.
Problems like capital gains taxes and estate taxes or having enough cash to but out a business partner.
The summer cottage may be a significant asset but do you really want to force your family to sell it, with all the great memories that are associated with it, to pay capital gains tax.
Of course, these obligations vary from country to country and state to state, but I think a decision about how to deal with them should be based on a rational financial planning process, not emotion.
Like a number of other things in life, our beliefs about insurance are shaped by our experiences, both good and bad.
But occasionally, give yourself a whack on the side of the head and ask yourself if your beliefs are rationale, or if they are based on unfounded fears.
If it is the later, think about thinking it through.
At one point, the subject of conversation somehow turned to life insurance.
Two of the couples stated that they were adamantly opposed to life insurance.
They were quite emphatic about the position that they just didn't believe in it.
I was quite baffled by this position.
My opinion is that life insurance is not something one believes in or not, like a religion.
It is a financial tool, an instrument that should be used appropriately and applied to solve future, probable financial problems.
I think it should be thought of no differently than a bank account, a stock portfolio or a mortgage, any other financial tool.
So why do people approach it with so much more emotion than these other commonly used financial instruments? One of the obvious possible answers to that question is, of course, the association that exists between life insurance and death.
Thinking about death conjures up emotion.
This is probably unavoidable.
But there is also the irrational fear that some people have that someone, somehow, inappropriately, will benefit from their death.
They don't like the idea of an industry, a sales agent, or even an undeserving relative benefiting from their demise.
Another fear is the Murphy's Law sort of syndrome - if I don't leave anything behind I may be around longer.
These attitudes are all nonsense, but unfortunately, they do exist.
There is also the attitude that having assets, such as property, will negate the need for life insurance.
People that think this way tend to overlook the financial problems they will create when they die.
Problems like capital gains taxes and estate taxes or having enough cash to but out a business partner.
The summer cottage may be a significant asset but do you really want to force your family to sell it, with all the great memories that are associated with it, to pay capital gains tax.
Of course, these obligations vary from country to country and state to state, but I think a decision about how to deal with them should be based on a rational financial planning process, not emotion.
Like a number of other things in life, our beliefs about insurance are shaped by our experiences, both good and bad.
But occasionally, give yourself a whack on the side of the head and ask yourself if your beliefs are rationale, or if they are based on unfounded fears.
If it is the later, think about thinking it through.
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