Tuesday, July 22, 2014


Dr. Phil McGraw once said, "You can't solve a money problem by throwing money at it."  We've all heard stories about how lottery winners lose everything they won, sometimes even ending up worse off than when they started.  In terms of the Law of Attraction, it is viewed as having been able to attract the money, but having too many limiting beliefs that need to be cleared to keep it.  The principle doesn't refer only to money, but health, relationships, all of the aspects of your life.

I believe it, but you can't prove it by me.  Some things in life I can keep very well, others not so much.    What I can say is, by adopting this way of living, things aren't so personal.  The bad things don't hurt as much.  I think of us all as blank slates, like department store mannequins.  Everything else is just the remnants of our choices while visiting this planet for this excellent vacation we call our lives.  It's like a tour guide told me, many many years ago on a bus trip in Ireland.  He found me drifting to sleep and reminded me of all the beautiful scenery outside my window.  When I smiled and said the current scenery wasn't all that different from my own in Northern California, he smiled and said, "Well, it's your holiday, spend it how you want to."  It was one of the first moments in my life where I was presented the notion of having choices, but not judged by which one I made.

I hope you are enjoying your life's vacation immensely.  If you aren't, consider the words of Led Zeppelin in Stairway to Heaven,  "There's always time to change the road you're on."

Now let's talk about money.  Or more specifically, life insurance.

I've been watching a lot of home shows lately.  During one where a couple paid money to have their home remodeled, the wife complained about cracked clay pipes which had to be replaced. Before that they had had to pay for asbestos in the homes floors to be remediated.  Basically she said, "Again we have to pay for something we can't see?"

We pay for insurance to protect ourselves and our loved ones from things that may happen that we can't see or foresee.  People don't like to pay for things they can't see, so we live in a world where we have laws forcing us to pay for many of the things which might impact other people.

I heard a joke once, I can't remember whose it was, so I can't credit the comedian.  The gist was that suicide is illegal.  "In less enlightened times, they would hang you for it."

If we have a mortgage on our house, we have to have house insurance to protect the lender.  If we drive a car, we have to have insurance to protect the other people in an accident and, once again, potentially the lender.  We don't have any laws forcing us to protect ourselves.  Well, potentially except Obamacare, but that is a subject for another day.  Today we are talking life insurance, not healthcare.

Although in a sensible world, that's what life insurance would be, wouldn't it?  Insurance to protect your life.  Instead, life insurance protects others in case you are unexpectedly removed from the equation.  Life insurance protectors your survivors.  In some cases it simply removes the burden of them having to put the funds together with which to bury or cremate you.  In others it may provide a nest egg for family who depended on your income.  Does that mean you should have life insurance?  It depends on your own moral compass.  In theory, if you have people who depend on you and your income, you should have at least some sort of nest egg, savings or life insurance that will make the transitionary time easier.  If it is simply to cover your cremation or burial and they will inherit enough savings from you to do that, they'll be able to access that money faster than the insurance money anyway.

I've always felt a bit bewildered by advertisements on television which try to shame people into buying life insurance for their babies.  No insurance could possibly protect you from such a loss.  It could cover the costs of the funeral, of course, and young couples who have just had babies might not have the savings to cover them otherwise.  Keeping in mind a 529 (or college savings plan) or a life insurance policy would both cost some sort of monthly fee, I think the former might be the more optimistic, "Law of Attraction" positive plan.  In either case, I would make sure I could use the 529 for funeral expenses AND the life insurance for education.  The financial vehicle which could do both would be where I placed the money I have earmarked for my child's future.  At the same time, beware any insurance that claims to be good for retirement.  401k's and IRA's are usually better vehicles for that.  I suppose it is prudent for me to mention in case you might be as naive about the matter as I was.  Funeral costs can be somewhere around $10,000 today.  Even cremation, which once seemed to be only hundreds of dollars, has begun to touch the thousand dollar mark.  At some point in your life, someone will die and you will be faced with the details and the expenses.

Have you ever considered what the insurance company does with your money?  Whatever monies aren't needed for day to day expenses or reserves for paying benefits, are invested.  The government monitors insurance companies investments to make sure their investments are low risk and they will be able to pay their claims.  Because they invest in low risk items like government bonds, insurance companies do not have years where they lose money on their investments.  Insurers also have portfolios that allow for quick liquidation of investments to pay claims.

In a perfect world, we would take our own money, invest it and have money for anything we needed from the costs of dying to the costs of living.  In our world, it is estimated as many as 80% of life insurance polices are allowed to lapse before a payout is due.  People buy more coverage than they can afford.  Life circumstances change.  An elderly person's life insurance can lapse, be discontinued and they can find themselves no longer eligible for the terms the dead policy had.  One thing to keep in mind, if you are in danger of letting your life insurance lapse, consider selling it on the secondary market.  In other words, there are companies who will buy your insurance policy for more than what a cash surrender of the policy would give you.  Particularly in the case of caring for an elderly parent, I have read where selling a policy on the secondary market has given caregiving children funds to help pay hospital expenses.  One important thing to consider and research before taking any action:  a policy sold on the secondary market will still be counted as open insurance held in that person's name.  That could impact the possibilities of purchasing any additional insurance.  If you are looking to invest some of your money, "Life Settlements," (aka that secondary market) might be a good place to try.  The minimum investment is generally $20,000 and you can apparently choose which policies you want to purchase based on payout and time frame.  At first it seems a very gruesome way to make money, but keeping in mind the benefits the seller may have needed might convince you it was actually one of the kindest investments you could make.

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