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Life insurance is often the first outside investment the head of a family
makes. It is the only way to create an instant estate. Life insurance buys
time. In fact, life insurance often represents the largest single
continuing investment that the average person makes during the course of
life.
Of all the estate-planning tools, life insurance is the most flexible.
Although its first and most important use is to create an instant estate,
other purposes make it of interest to the owner of the large estate as
well as the small, to individuals and companies, to business owners as
well as employees.
Insurance replaces a financial loss resulting from the death of an
individual. It is used to supply money for business and estate settlement
purposes. Often it is an investment, providing an opportunity for saving
with safe, tax-deferred capital accumulation. Always, it generates
liquidity for the survivors to pay taxes and debts and, it is hoped,
ultimately, enjoy the financial freedom and security liquidity provides.
Will Rogers Did Not Want to Buy Something He Did Not Understand Will
Rogers had never owned stocks or bonds. He always said he did not want to
buy something he did not understand. But there were two things he did
understand life insurance and real estate. He had sent money back from his
travels in South Africa to take care of his life insurance, and he had
added to the policies over the years.
At the time of his death, Rogers had accident insurance with Lloyds of
London for the maximum they would issue to someone who flew in airplanes,
$262,500. This was the sum paid to the estate following his death in an
airplane crash in Alaska in 1935. Rogers also had two life insurance
policies with The Penn Mutual Life Insurance Company, and one each with
The Equitable Life Assurance Society of the United States and The Mutual
Life Insurance Company. His total life insurance ran up to $482,500. But
this was not all. He had endowment policies amounting to $200,000. There
were annuities. He had U.S. savings bonds. And he had investments in real
estate.l Today, there are insurance policies to meet any insurance need
and many investment objectives. As one piece of the estate plan, the
insurance program should be designed to achieve your goals and objectives.
Consider the following principal types.
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Long-Term Care
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Supplement
