When I started out in this business back in the 1970’s, I had to learn my trade and how to negotiate the sale of life insurance, pensions, and investment products. One the realisations I had at that time, was that people actually die. This may sound like a late realisation on my part, but I was a young man who had never experienced the death of a loved one. Thankfully, death hadn’t been on my radar at that point in my life.
As the old saying goes, there are only two certainties in life, death and taxes.
I read a lot during those early days and a couple of books impacted on me during that period. Sitting here at my desk many years later, my eye is caught by a row of books I have. There are titles on smarter investing, the tricks of the rich and passing on the family business among others. I have these books as they help me to help my clients. They keep me informed and provide new ideas which can make a difference in people’s lives. But one book that has stuck with me more than any other has been How I Raised Myself From Failure to Success in Selling. It was written in the 1930’s by an American named Frank Bettger. Bettger entered the insurance business having first worked as a pitcher for the New York Yankees. Due to an injury, he had to give up his beloved sport, and then entered the world of financial services.
In his book, one of the things that struck me was a piece of advice he was given by an older member of staff. This senior member of the team took him aside when he saw Bettger struggling in his attempts to increase sales. His advice was this – when you get a family in front of you, you may be the only representative of the financial services industry that this family will ever meet. The advice that you give them, may also be the only advice that they have access to. The Life Insurance money that you garner for them may be the only money they see – and they may have to live off that. Therefore, what you do – or don’t do, will impact on this family for years after you have left.
This statement is now truer today than it has ever been.
I didn’t understand it’s meaning in full until we had a regulator imposed on our industry. At around this time that a great number of qualified people left the industry and now there are significantly fewer professionals available to go and talk to families about their needs.
Everybody will die, it’s just a question of timing.
The joke in the business back when I joined it was that it was better to be 60 than to be 50. That’s because the average age of death is 57 to 58 years of age. Astonishingly, 97% of all claims under life insurance policies are paid without question. Our industry provides for families without question faster than any other industry does.
Recently, one of Irelands foremost Life Companies confirmed that they pay out an average claim value of €120,000 across all the range of Life Insurance products they have. A paltry sum. This money can include payouts to cover home loans and debt. So, what is left for families to live on?
Life insurance is one of those things, you either have enough, or you don’t and judging from the above figure, most people do not have enough. The amount of life insurance that people should carry depends upon their own personal circumstances. €120,000 is not a lot of money, it’s about three years’ income for an average worker. Is that sufficient to take care of a family?
Some people may feel better about the fact that they have a house which they can leave, but I like to remind them that you ‘can’t eat a house’, especially when the family needs to live in it.
Life insurance does not cost a fortune. This is the foundation stone of financial planning. Before we explore any question of investing, we must examine the question of what happens when you’re not here. What will the financial impact of your death be for your family? Hopefully, it won’t happen for many, many years – but there is little point in pinning your family’s financial future on ‘hopefully’.
If you do not begin your financial health on this one key step, then if something goes wrong today, or tomorrow, the whole financial plan can come tumbling down around your family’s ears. Start with the most important step of life insurance and then go from there. Savings and investments are important, but they should never be put ahead of your family’s security.
Family always comes first.
In his book Enough, Paul Armson asks the question ‘how much is enough?’ If the answer is ‘I don’t know’, then take the time to talk to a professional. All it takes is a phone call to start ensuring that your family will be provided for if something were to happen to you. If it’s taken care of now, you won’t have to worry about it in the future.