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The Seven Virtues of Life Insurance: #7 – Leverage

Life insurance is much more than a legal contract that provides an attractive financial benefit for your heirs. It is actually a tool that enables those beneficiaries to act virtuously.

All told, I see seven of this virtues. One is Leverage.

Leverage has a bad name. All too often, peope associate it with wanting an unfair advantage. Leverage does give you an advantage; whether it is fair or not depends on how you obtained it. If you gain it “playing fair,” then you have earned it, and so deserve the rewards you reap.

Life insurance is a very straight and narrow way to gain leverage. Every dollar of benefit in the policy literally costs pennies. This is because the insurance company pools your money with a multitude of other policy holders; then lets the actuaries and investment managers crunch their numbers; keeps solid control overvcosts; and takes all the other measures needed to keep sales up and make a profit.

They have a contractual obligation to pay a claim when you pass on. And if that tragically happens just one month after taking out your policy, then your beneficiary will collect a hefty sum for just one premium payment.

THAT is leverage, and it is a very smart and effective way to take care of your family and your business.