Life Insurance Is for Living People

IN these difficult financial days there are few families indeed that have escaped the necessity of keeping an exceedingly close watch over their expenses. In many instances luxuries have been eliminated, and items for necessities have been scrutinized again and again in the hope that some new reduction might be made which would restore the budget to balance. In this anxious search for further ways to economize, the question as to the continuance of life insurance premiums has doubtless arisen. This particular item of expense, with its farreaching significance, is exposed to a grave peril when such a question is raised concerning it, because its payment is purely voluntary and its lapse is dangerously easy. Premium notices are simply friendly reminders. They come, their days of grace slip by, a decision is necessary, money is scarce — shall they be paid?

Under present conditions, the greatest danger to which the life insurance premium is exposed is failure to recognize it as one of the definite costs of living. It deserves a fixed place in the family budget, and since it may very properly be classified therein as savings, its payment is in reality more gain than expense. When it has been accorded its rightful budget recognition, it takes its place among other routine expenses as a matter of course, and there comes to be associated with its payment a distinct feeling of progress. When it has been denied this recognition, it appears in the light of an extra load which overhangs the budget, and there is associated with its payment the feeling of a burden to be carried. Most people, in fact, refer to their life insurance as something which they ‘carry.’ Such an attitude is unfortunate for them, as they will clearly see when they take their insurance off their backs, for which it was never intended, and put it into their hearts and heads, — and budgets, — where it belongs.

Once it is in the budget, and considered solely as a financial transaction, the omission or reduction of life insurance payments differs sharply from all other expense items which may be omitted or reduced with the intention of subsequent restoration, for there is always the danger that life insurance may not BE recoverable at any price. It differs also in this: that whereas other eliminations may, by their exact amount, restore the budget to balance and thus justify the act, the elimination of the item for life insurance is a bad financial risk to take under any conditions, for this one item has within itself the power to reproduce the entire income side of a budget for an entire family for a long time.

In many cases, especially those involving policies of several years’ standing, the payment of the premium involves little if anything more than the transfer of funds out of an existing bank account and into the insurance bank account, with this notable advantage — that, whereas a hundred dollars in an ordinary bank account represents a cash asset of exactly one hundred dollars, this same sum in the insurance account may represent several thousand dollars on some uncertain to-morrow. In view of its tremendous significance, there is no item in the budget around which the entire family should rally with a more stubborn determination that it shall be maintained than that for its life insurance, because no other item offers such value for money spent. Nothing but the minimum requirements for food and shelter, clothing and health, takes precedence over the maintenance of life insurance.

Consider what life insurance is, and what it does. The day has long since passed when its usefulness was limited to a method of paying for funeral expenses and otherwise providing the finishing touches to an ended career. That was the old conception of death insurance, which the present conception of life insurance has happily supplanted. For life insurance is not bought because someone will die; if is bought because someone, dependent upon you in some way, will surely live. Life insurance is for living people. It carries on for these living people — on and on and on, for this purpose and that, with a certainty of fulfillment that is one of the blessings of mankind. It makes certain that which might otherwise be doubtful. Still it is not merely an abstract idea to conjure with — it is a practical plan to work with. It serves specific purposes as varied as human needs. It is a savings fund and a sound investment combined. It is a business asset of the highest grade. It pays mortgages, educates children, continues homes. It is the first line of defense for untold millions of people, to whose continued existence it is doubtless more vital than any other property.

Life insurance is properly, which may be bought and owned absolutely. As such it is unique in many ways. It is future earning power, bought and paid for, and held in readiness for immediate delivery, like a stand-by power plant, steam up, ready to function if the dam breaks — earning power, available at a tremendous discount, which cannot be assured by any other agency. It constitutes the only known method of creating an estate before it has actually been accumulated. It is the only property in the world which can be bought upon the installment plan with thee guaranty that any installments unpaid at death shall be canceled. It is the only investment known with a guaranteed collateral value this year, next year, or any year. Considering what it is, and what it will do, it is no wonder that over one hundred billion dollars’ worth of this property is owned in the United States to-day.

The statement that life insurance is for living people specifically includes the insured himself. All its standard forms are a combination of protection and investment (except term insurance, which involves limited protection alone). The investment clement exists in the cash and loan values of the contract — values which are comparatively small during the early years, while the greatest expense of putting it into force is being amortized, but which increase rapidly thereafter. The savings thus accumulated represent, in many cases, capital which would not have been available at all had it not been systematically deposited in small sums in pursuance of the terms of the contract.

Most men know something about what life insurance will do for their heirs, but do not know enough about what it will do for them when their own retirement age is reached. For example, a $10,000 ordinary life contract, issued at the age of forty, will provide a life income to a beneficiary who is, say, fifty when the income starts, of about $550 a year. This same policy, if the insured himself lives to be seventy, will provide sufficient capital to buy at present rates an annuity for his entire remaining lifetime of about $750 a year; or, if the insured’s wife of similar age also survives, it will buy a joint annuity of about $540 a year which will continue as long as either of them lives.

Misinformed people are prone to look upon life insurance as a gamble in which they themselves must lose if their beneficiaries are to win, whereas the facts indicate that it is the greatest bet on earth. It offers heavyodds — say 25 to 1 — that the insured will live a year. If it loses, it pays promptly and in full. If it wins, it renews the same odds year after year, no questions asked; and if, after, say, twenty-five or thirty years have passed, it is still winning, it stands prepared to refund to the insured himself all, or substantially all, that it has received from him. Anything which is capable of doing these things is worth a real sacrifice to keep, and plain ordinary life insurance, issued by strong companies, has been doing exactly this for years.

Life insurance is for living people. If the purpose for which it was bought originally still obtains, then its value to-day is greater than it has ever been before. No other investment has the flawless record of life insurance in these troublesome financial times, and no other investment in any times or at any price is remotely capable of duplicating its granite-like stability, and of conferring upon its owner such lasting peace of mind. The very suggestion of its lapse has an ominous tone, for, of all the tragic reminders of what might have been with which every family bereft of its breadwinner must inevitably be confronted, none can have quite the tragic significance of an abandoned life insurance policy which might have been valid.