Thought for the day:

“It’s not how we fall: it’s how we get up”   Sharon Stone.

 

If you will read no further:

Reflect for a moment back to the 1980-82 recession followed by the Savings & Loan crisis in the mid ‘80s and Black Monday in October, 1987.  Then there was the recession of 1990-91 and again the dotcom bubble in 2001; followed most recently by the 2008-09 Great Recession. If you were young and earning a living and didn’t lose your job, each of these (in retrospect at least) represented an opportunity to invest for greater gains going forward.  But if you are retired when these occur and need to take income from a portfolio in decline and later as it tries to climb out of the “dumpster” it could be devastating.  And if your spouse needs care when this happens and even more is required from your portfolio to pay for it…..well, you get the idea.  And read this:  4% Rule WSJ 3/13

Buying insurance and never needing it may seem like a financial bummer.  Needing insurance and not having it can be a catastrophe.  Our clients are retiring in the most uncertain of times.  Don’t ignore the opportunity to provide them with the financial support that only insurance can achieve. 

 

Thought for the week:

Someone asked me recently how I come up with an original thought each week about insurance.  After all, PEARLS has been published each Monday for the past four years….and no repeats.  My answer is that every week I talk with financial advisers who ask questions or have situations involving insurance their clients own, or should own.  And every week there is a same theme repeated.  Nobody wants insurance when there is plenty of time to get it; and everyone wants insurance when it is too late.  That thought continually stimulates my editorial juices.

In all my years in this business I have delivered many different kinds of insurance benefits ranging all the way from modest to huge.  No one has ever told me they didn’t need or want the money; and no one has ever calculated the return on the premiums paid.  And invariably the money comes at the most opportune time.

Unfortunately, the majority of people I meet rely on their financial advisors who typically avoid advising them until they request it; and that is usually when it is too late.  Take life insurance for example; every retirement plan involves leaving a legacy.  Sometimes the clients want to leave money behind for their family.  But more importantly, they must plan to leave money behind otherwise they must plan to empty their portfolio the day before they die.  The best advisor among us cannot guarantee that strategy.

Purchasing life insurance later in life is not at all the same as it was when you were raising your family.  Then it was an expense you bore to replace lost income in case you “checked out” early. But later it becomes an investment.  Because later, it is no longer a matter of if you die, but when you die.  Every decent life insurance policy will deliver a 5% tax free return (or better) on the premiums you deposit into it if you die at life expectancy.  Want a higher return?  Die young!  On the other hand, how many of us would give up a few percentage points of return on our eventual legacy if it could buy us 6-10 more years of healthy living?

Make that life insurance product one that pays for long-term care when needed and provide the best quality of life for the insured, a heighted sense of financial security for the spouse and protect as much of the legacy as possible for the heirs.  Now what is wrong with recommending that to every client when you conduct their periodic review? And do it before they ask you about it, OK?

Oh, and one more thing.  The most difficult challenge when writing these weekly treatises, is coming up with the “Thought for the day”.