Do you remember all those fables you “rolled your eyes” over while growing up? Well, the reason they were made fables was to give wisdom in any age: past, present, or future. My favorite fable and story that explains why we need insurance in all its forms is “The Three Little Pigs.”
In “The Three Little Pigs,” each pig built their house on varying foundations of straw (most weak), wood (weak), and brick (strong). Imagine the big bad wolf that seeks to eat the pigs is the unexpected circumstances in life that challenge us and our loved ones. In the fable, the big bad wolf blew down the first two pig’s houses with weak foundations. The wolf was not able to blow down the third pig’s house made of bricks and a strong foundation. As the story goes, in order to survive, and prosper, we need a strong foundation to withst and life’s unforeseen circumstances and challenges. That strong brick foundation in real life that protects us AND our loved ones is Insurance to include Financial Planning as the mortar that hold the bricks together. Insurance has many forms like: Life; Health; Auto; Homeowner’s; Renter’s; and Flood. There are three main types of life insurance which are: term insurance; whole life; and universal life. Let’s compare these types of insurance to something many love to do: buy and drive cars. Term life insurance is like renting a car with the same payments throughout (level term). After 10 to 20 years you have to return the car and your coverage would end. With whole life insurance, you own/buy the car/insurance. You keep the car/coverage for life. Universal life insurance is a combination of the best features of term (renting) and whole life (owning for life). Potentially, universal life gives you the most “bang” for the “buck.” Life insurance is often the first insurance to get because without “life” we have nothing and the wolf wins. Health insurance is very important, too, for without health there is no quality of life. In addition, if you have a serious illness without the proper health insurance, you can go bankrupt and deep into debt overnight. To protect our house and foundation literally, we will also need homeowner’s or renter’s insurance. If we have a car, auto insurance is the next type of insurance needed. Last, but not least, we can’t forget the mortar for the strong brick foundation which is financial planning. This includes advice on how to manage money, save money, and invest money at all stages of life for you and your loved ones. Some of the building blocks of financial planning through an agent and broker are: IRA’s; 529 College Plans; 401k’s; stocks; bonds; mutual funds; and ETF’s (Exchange Traded Funds).
Don’t roll your eyes, but I have one more nugget of wisdom for you: “Don’t Be Penny-Wise To Be Pound-Foolish.” The expense (where I’m very competitive) of insurance and its products are well worth the life-long protection AND peace of mind you and your loved ones get in having a strong foundation to deal with any of life’s challenges.