I am contemplating obtaining life insurance for our family. It is very confusing all together. Is it worth it or are we wasting our money? Overall what is your view?
There are really two questions we think we hear you asking. (1) Is it okay to make yourself, well, sort of redundant? One might say, now that I am so necessary to my family, God will take care of me. But if I buy life insurance, I am making myself less necessary so perhaps God says, well, I can take you because your family will be fine. (2) Is it financially a good decision?
On the first question first, God wants us all to be interdependent and mutually supportive of one another. When society comprised few individuals and life was simpler, the small farming village knew that if Tom had an accident, Joe, Harry, and Ted would take care of his family. It was an unofficial insurance company. But with life as complex as it is now, we can no longer leave it to informal arrangements so life insurance becomes the institutionalized form of helping one another. And there is nothing wrong if Harry who organizes all the cooperation to help Tom’s family makes a living out of doing so. In other words, a life insurance company operating profitably while providing this service is a good thing. We don’t think that having insurance is making yourself redundant or that it raises any moral or religious questions. Obviously everyone’s circumstances are different but a conversation with a trusted financial advisor or experienced insurance person is definitely the way to go. Then analyze the available plans in terms of what might make sense to you.
On the second question, obviously you’d have to carefully consider your situation. A couple that owns a very large successful business with substantial assets may not need the same kind of life insurance that others do. We also think it worth exploring ways in which life insurance can play an active role in your financial growth strategy. Some people are more enthusiastic than others about this ‘be your own banker’ program, but we encouraged members of our family to purchase life insurance as part of this strategy. They are working with one of the companies we mention at the end of this answer.
But what really interests us is the question of how we balance a hopeful view of the future while acknowledging that tragedy can strike. Too much focus on what can go wrong can paralyze us. Fear can render us incapable of accomplishment, possibly even too fearful to marry,have children or start a business. However, on the other hand, ignoring the possibility of things going tragically wrong can leave us unprepared and desperate in a crisis.
Ancient Jewish wisdom recommends dividing one’s financial assets into three categories. One-third should be kept in real estate, one-third in assets and one-third in cash. Conceptually, this translates into making investments that have long term value, such as real estate, but that also run a risk of being lost altogether at the whim of a government (Jewish history is replete with expulsions); second, having ‘working capital’ to cover expenses, personal needs and business development; and, finally, having one-third of one’s assets completely liquid and transportable to deal with unexpected events.
Psychologically, we could translate this into living our lives assuming that our financial future is bright and making certain long term investments while also putting our time and efforts into tipping the odds in our favor whether through taking care of our health, getting an education or devoting enough time to our business. Life insurance would fall into the final third—recognizing that things can go seriously wrong and we should not be skating so close to the edge that we will fall over a cliff should that happen.
We don’t think you are asking us for specific advice on how to pick an insurance agent or company, though choosing wisely will make things less confusing and more worthwhile. You can ask neighbors, co-workers and friends for that bit of local advice. Perhaps someone in your church or faith family has a long relationship with an insurance expert they trust.
If you are interested in finding out more about making your life insurance part of an investment strategy, we are happy to recommend two life insurance specialists with whom we are personally familiar and whom we trust. We believe they would both advise you honestly though, of course, you must do your own due diligence. Living Wealth, in Lawrence, Kansas, 785-842-8333 ask for Kim, and Life Benefits, in Henderson, Nevada; 866-502-2777 speak to Ben.
In summary, yes, we think a family should have many kinds of insurance including life insurance these days until at least they have the assets to provide their own security in worst case scenario. Make the exploration an exciting journey of discovery and in addition, we hope you will meet some new and wonderful friends as you gain knowledge in this field.
Rabbi Daniel and Susan Lapin