26 November 2013 0 Comments

Are You Worth More Dead Than Alive?

what am I really worth?“I’m worth more dead than alive” is a comment I have heard often during my many years in the life insurance arena.  It’s usually said in jest by an individual just after he has purchased a new life insurance policy or as a put-off to the insurance agent attempting to set up an appointment to discuss life insurance.  It can’t be taken seriously; though to even be uttered, one must ask whether the true purpose of life insurance is understood.

If you are currently age 35, earning $75,000 per year and plan to work until you are 65, your total income potential, based on today’s value of the dollar, is $2,250,000.  This assumes that future income increases only keep up with inflation.  It was Solomon S. Huebner (1882-1964) who originated the concept of “human life value” as a standard method of calculating life insurance value and need.  His concept was that life insurance must be considered as more than just a burial expense policy. It is future earnings potential that must be looked upon as the major asset to be replaced in the event of an untimely death.

Dr. Huebner taught the first insurance course ever given at the University of Pennsylvania’s Wharton School and established an Insurance Department at Wharton by 1913 where he taught until retiring in 1953. Huebner travelled the country to insurance meetings fiercely advocating for industry change.  Calling for life insurance salesmanship to be given the status of a profession and exhorting agents to be noble about their mission, he established the American College of Life Underwriters in 1927.  On the occasion of their 125th Anniversary in 2007, the Wharton School included Huebner in their List of 125 Influential People and Ideas.

So, when an insurance agent suggests that you carry life insurance in an amount that is at least 10 times your current annual income, it is not an outrageous proposition.  You will not be worth more dead than alive.  Your human life has value…value that can be quantified in the terms of dollars.

Coming up…real life examples of the concept of “human life value.”

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