Synergy Asset Management

Life insurance and risk managementThe following is an excerpt (pp. 195-196) from Exit Insight: Getting to “Sold!” written by financial and investment expert and author Joseph M. Maas of Synergetic Finance.

The purpose of risk management

There is a great variety of risk in our lives, and mitigating these risks is an intelligent response to achieve financial self-preservation.

Personal risk

When considering insurance as a means for financial protection, two main issues must be considered and resolved:

  • Your ability to accept the financial risk inherent in insurance policy protection, and
  • Your willingness to weather the volatility that sometimes accompanies insurance policies’ value development

There are two main reasons for purchasing insurance policies:

  • To protect your financial well-being
  • To accumulate cash
  • Or a combination of the two

Insurance as a source of financial support for dependents

Insurance can be an excellent tool for providing financial support to the surviving family members. Funds from insurance policies can be used for the typical household expenses of paying bills, maintaining mortgage payments, purchasing food, clothing and health care, and can also be applied to education, day care, legal fees, or business costs.

Insurance to service debt

Insurance is also an effective means for providing resources to pay off a mortgage, vehicle loans, credit card debt, and debts such as college or business loans. Death does not terminate the estate’s obligation to pay back these debts, and an insurance policy could be very useful for preserving your survivors’ finances.

Insurance for personal uses

Insurance policies can also be a great resource during your lifetime. Cash value life insurance policies can potentially accumulate cash you can use for any purpose through a policy loan, or policy termination if circumstances warrant. If you terminate your policy, you would pay taxes on the funds you receive, possibly at a favorable rate.

Copyright © 2014 by Joseph M. Maas. All rights reserved.

To order a copy of the book for yourself, a colleague or a loved one, visit Merrell Publishing online or Have questions about Exit Insight or Exit Planning? Want to schedule a complimentary call with author Joseph M. Maas? Call Joe at 206-275-5455 or send him an email.

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