Most people do piecemeal planning when it comes to insurance and financial planning.  They are playing the game of life without a game plan.  Life insurance should be the foundation of that game plan.  Once you have the foundation, you have something to build on.  Every financial plan should be developed with the underlying assumption that you may die or become disabled tomorrow.  No one has a lease on life.  If you don’t die before age 65, you will die after age 65.  No one dies at the right time.  There is always a need for cash when someone dies.  With life insurance, the event that creates the problem, i.e. the need for cash , also becomes the event that creates the solution to the problem.

Most people are reconciled to the need to purchase insurance on their home, their car, their jewelry, and other valuable assets.  Unless they have had the time to accumulate substantial wealth, it is highly probable that the most valuable asset they have is their ability to earn an income…their Potential Earning Power (PEP).  their income makes everything else possible.  If it makes sense to insure the golden eggs, it certainly makes sense to insure the goose.  If you could insure one, but not both, which would you insure…the goose or the golden eggs?

The First Law of Insurance states that you should insure first that which you can least afford to lose…your income, your health, and your life.  Think about that for a minute.  Insure your most valuable asset first.  What would happen if you had been killed or disabled in a car accident last night? If you had been killed, would your family be ok? What’s okay? How much money is enough?

Most people do not like to think about life insurance.  It means thinking about death.  Death is a fact of life.  If you don’t deal with it now, who will?  Buying life insurance requires planning and foresight.  By the time you know that you need life insurance, it may be too late to get it.  Being told by your doctor that you have a heart problem or cancer is too late.

Life insurance is like a parachute.  You have to buy it before you need it.  You can buy real estate or stocks or bonds anytime.  That is not the case with life insurance.  You have to purchase it while you are in good health.  Buy it now.  There is no advantage to waiting.

Having a cash cushion is just plain common sense.  Life insurance is a common sense solution.  The problem with common sense is that it is uncommon.

Howard Wight, Life In a Nutshell