Out of the blue

Late last week my little sister Carolyn called my wife (a CFP®), who happens to be her financial advisor, checking to be sure her life insurance was in order. It’s a funny thing about life insurance...most people don’t think about buying it, much less making sure the owner and beneficiary designations are in order. That is, unless they are close to a life changing event. Weeks before, Carolyn was diagnosed with invasive breast cancer and was about to go in for major surgery when she called. When I saw her last over a month ago, she was the vision of health and beauty without even a hint that something was going on. There was no family history or lifestyle issue that could indicate even the possibility of cancer. It literally came from out of the blue.

But Carolyn is very organized and one of the few who keeps her financial house in order. And she knows all too well the value of life insurance. In the early 90’s, she was the mother of a 2 year old (Michael) and into the third trimester of pregnancy with her second child (Katie) about to be born. Then she got the call that no spouse ever wants…her husband, a hard charging exec in the hotel business had died of heart failure that morning at his desk. He was in his 30’s, a health nut and other than complaining about a rapid heartbeat a few days before, had appeared in as good physical shape as anyone with a very bright future ahead. This happened like most unexpected and tragic life changing events occur; unforeseen and out of the blue. Without life insurance, the home with a large mortgage predicated on the breadwinner’s income is gone.The kids’ lives change dramatically and the dreams of living in affluent communities with top tier schools vanish along with any visions of a college education. Their lives would have been very different if not for the life insurance Carolyn’s Dad and Bro convinced her husband to buy a few years earlier.

Every year, the Life Insurance industry designates September as Life Insurance awareness month…but it’s not working. Statistics tell us that life insurance ownership is at its lowest level in 50 years and only 44% of households have it. Worse yet is that 7 in 10 families with kids under age 18 would be devastated if the breadwinner died. The financial press has done such a great job arguing that life insurance is a “bad investment” and a “rip off” that most, if they are given the opportunity to buy it at all, choose simply to pass. While everyone is focused on the cost or the kind of insurance, they fail to recognize the most important thing of all; to at least have some no matter what the cost/type/ company/ commission etc. . . . And believe me, when the proceeds are given to the beneficiary, it’s never enough and not once have I seen anyone turn it down.

With the good fortune of life insurance, Carolyn was able to
relocate to a beautiful home in an affluent beach community near San Diego where our parents live. She has since remarried, her son Michael is now a sophomore at Gonzaga University and Katie is an honor student at Torrey Pines High School looking at top tier colleges…to be paid for in large part with life insurance proceeds. She has built a successful business and done an outstanding job raising the kids with the help of her husband and parents. But now she is faced with perhaps an even greater challenge…beating cancer. With the peace of mind knowing that her financial house was in order, she had surgery this week and came through it like a champ (hey…she’s a Lefferts!). Every indication is that all is now clear and it’s a matter of recovery.

You hate to see bad things happen to good people, but none of us are immune to it. It’s even worse when the devastating results of bad things
could have been prevented with proper planning. I’ve seen businesses sold in fire sale fashion ending generations of a legacy, once close families become divided never to speak to one another again and kids on a success track go the other way, all because life insurance wasn’t in place when it was needed.

Growing up with my father in the life insurance business, I was always bothered by the stigma of the life insurance salesman. It wasn’t cool or “hip”. It was something they made jokes about and movies like Groundhog Day with. But as time goes on, the old man gets smarter and I’ve gained wisdom through life experience. It’s no longer uncool and is perhaps one of the most important and meaningful financial decisions one can make. We often hear and read about all the negative aspects of life insurance and frankly there couldn’t be a more misunderstood financial product. But when you see the results of a family or business when they have it, and when they don’t, you come to realize about the coolest thing you can do is buy life insurance.