Life Insurance Insights

When I started selling life insurance almost 54 years ago the toughest part of the job was finding people who would grant me an interview.  I thought I had an important message to share, but people just weren’t interested in talking about their death.  Although some life insurance policies provide living benefits, the big payoff is when you die and who wants to talk about that.  This takes me back to my very first blog that refers to a Woody Allen movie quote of how the worst thing in life is being stuck in an elevator with a life insurance agent.

And yet…we all die.

And…there is no other financial vehicle that is specifically designed to meet whatever needs have been left undone at that time.

None of us knows when that time will come, but I assure you that no one who has been given the news that their time is limited—none of those people—have ever complained that they bought too much life insurance.  None of those people complained that they were forced to spend time with an insurance agent.  No widow has ever complained that the life insurance premium was too high.  No business partner has ever complained that they have the cash with which to buy out the interest of their deceased partner and pay a fair price with no squabbles…no hassle.  More…

There are two basic types of annuities:  Immediate Annuities and Deferred Annuities.

An Immediate Annuity is used to distribute assets and it has the unique feature of guaranteeing income for life. This guarantee can be over the lifetime of an individual or the joint lifetime of a couple.  Using this contract to distribute income at retirement not only guarantees a competitive yield for life, it also assures the retiree that minimum annual distributions will be met avoiding any penalties.

The disadvantages of immediate annuities are that there is usually no flexibility—once income commences there is no way to accelerate remaining funds—and a savvy investor might want to forgo guarantees for the possibility of earning more through other investments within the IRA tax shelter. More…

Most of us carry a certain amount of debt. It might be as major as the mortgage on your home or only the monthly balance on credit cards. It’s how we live in America…and as long as it is properly managed, debt can be a good thing. It allows us to purchase homes that could never be afforded if a single payment were required. It provides instant cash when it is needed for timely purchases that make sense even if funds are not immediately available and liquidation of other assets is not advisable. Debt can assist when needed to cover the cost of unexpected emergencies.

The key to debt management is to keep the total amount borrowed from exceeding your ability to repay out of future earnings. That’s all well and good, as long as future earnings continue. When earnings reduce or stop entirely the obligation to repay the debt continues. There are two occurrences that are unpredictable and will totally stop all future earned income: Disability and Death. So, before incurring a mountain of debt it is important to determine how to manage that obligation under either of these scenarios. More…

Recently I read about a situation where an insured died and their life insurance proceeds did not go to the person who was the intended beneficiary.  It’s a situation where the insured obtained a life insurance policy through his employer’s group plan.  Let’s call him Stan.  In 1991 Stan, a divorcee, named his son as the beneficiary.  Ten years later the insured was married to Susan. In November, 2010 Stan filled out and signed (but never submitted) a beneficiary designation form naming Susan as the policy’s sole beneficiary.  In January, 2011 Stan was diagnosed with a life threatening condition.  He executed a will stating that any life insurance proceeds in his estate be paid to his wife, Susan, but he still did not file the previously completed beneficiary designation form.

Stan died in February, 2011 and when Susan filed a claim form to the insurance company stating that she was the beneficiary, the insurance company indicated that the son was the beneficiary of record.  The insurance company was not attempting to avoid payment of a claim, they just had to make sure the money got to the person legally entitled to it according to the beneficiary instructions in their possession.  Even when Susan showed the company the will that mentions life insurance proceeds should go to her, those instructions only pertained to life insurance proceeds that were in Stan’s estate.  The proceeds of this policy were never in his estate.  The claim was paid to the son.  Susan appealed to the courts for a reversal, but the decision to pay proceeds to the son was upheld. More…

The final in this series on Leadership

THE PRICE OF LEADERSHIP

The commitment to be a leader carries a price.  The more visible the leader…the greater that price.  When people look upon you as their leader you have created an obligation to fulfill their needs.  You have set standards that they expect to be maintained.  If you suddenly abdicate the roll of leader, they may flounder unless you can find a substitute to fill the void.

They also look to you to set standards of behavior.  Leaders are expected to be honest…to have principals…to tell the truth.  A leader cannot lead by edict alone.  Leading a good life is the responsibility of a good leader.  When others count on you, the price is high when you fail them.  If you are to be a leader then you must be willing to lead by example.

What a leader does is so much more important than what a leader says.  Why is it that so many children who are abused grow up to abuse their own children?  Why do so many children with alcoholic parents turn to alcohol themselves as adults?  These adults vowed to learn from the mistakes of their parents.  They would learn from their parent’s faults…but that’s often not what happens.  They fall into the pattern that they have been taught by example. More…

The final element of Focus in a leader is Passion and Dedication

Passion/Dedication

Most of the great leaders of history are passionate about their quest.  But passion is not necessarily present in every leader in every undertaking.  Dedication is absolutely essential if a leader is to succeed.  But Passion and dedication are not always synonymous.

Colin Powell is a proven leader.  His military life presents the picture of an individual who worked his way to the very top, admired by friends and foes.  He looks like a leader.  He acts like a leader.   He is well informed and intelligent.  He is a great public speaker.  He shows a passion for his cause—usually.

I once had the honor of having breakfast with him at an insurance industry function and then listening to him as he captured the attention and respect of the entire room.  This was prior to the first George W. Bush nomination.  He gave no inkling of any particular political leanings.  But most of us in the audience that morning—especially those of us who were able to speak to him one-on-one prior to his presentation—came away believing that if he chose to run for president, he could win no matter what ticket he selected. More…

Continuing with the importance of decisiveness and risk taking as part of the leader’s Focus.

Decisiveness

Leaders make decisions.   Decisions should be made with adequate forethought and research, but not at the expense of being prolonged.  Indecisiveness is not a trait of a leader.   Make a call and go with it!  Once a decision has been made a leader does not exhibit any second thoughts to their followers.   Discussions with closest advisors are also not only acceptable, but advisable.  But once a decision has been announced, to the rest of the world that must be a clear unequivocal go!  There must be no hesitancy.

If you have a good feeling that you have enough data with which to make a decision, then make it!  You are focused on the goals so most of the time you will be right.  Your followers will have the comfort of knowing that their leader can make decisions and is a person of conviction.  If changes are required—and they are made with equal decisiveness—there need be no loss of face. More…

A leader takes charge of the big picture.

The Big Picture

Becoming sidetracked with minutiae distracts from focus on the goal.  Consider the conductor of a symphony orchestra who has before him the music of Beethoven and 95 talented musicians ready to play it.  The conductor has heard this same composition played by other orchestras a dozen times before, but he knows what he wants from this piece that will take it above and beyond previous interpretations.  He will have only one performance date and a few rehearsals leading up to this performance.  During this time he must communicate his vision to the musicians who will be waiting for his baton to drop and the first note to be played.  He cannot play each instrument himself and he must respect the talent that each musician brings to the table.

He starts by telling these talented artists, not how to play their respective instruments, but how he feels about the piece of music to be performed…about how he believes each section and soloist can bring his dream to life.

As the rehearsals proceed he calls to the attention of each section—the strings, the wood winds, percussion—how they can modify their performances in order to bring about the desired total effect.  Finally, at the last rehearsal he addresses his people with an upbeat message of how well he knows they will come together for the performance night. More…

Continuing on to the last important trait of a leader—Focus.

Focus

Focus is defined as “the concentration of attention or energy on something.”  In order to focus you must know what that “something” is.  That requires that you know where you have been; where you are now and where you want to go.

If you’re in doubt about your objectives, give it some more thought before proceeding.  Your answer can be broad or pinpointed.  The President of the United States must address the needs of the most powerful nation on earth.  If you are concerned only with leading your minor children through their formative years, your scope is greatly narrowed.  However, the immediate importance to you of being able to lead effectively cannot be overlooked and may be the most important thing for you to accomplish in your life.

Dwelling on the past can be paralyzing.  Move on!  Applying efforts to the tasks at hand and planning for the future is what leaders do.  They also forgive.  Dwelling on transgressions, real or perceived, suffered at the hands of others is a colossal waste of energy and time.  Openly forgiving others can be one of the most cathartic acts you can perform. More…