CHAPTER

FOUR

The Concept of Life Insurance as

Estate Creation and Preservation

The concept of life insurance as an aid in the creation

and preservation of estates is not much different from that of
life insurance as a means of family protection. The variance is
one of degree.

Whether prospects already have substantial incomes and

means, or are ambitious to create for themselves and their
heirs a sizable estate, they are faced with two alternatives.
One, they can save with regularity a block of money that
they must invest and continue to reinvest in the hope that
they will not only survive but will avoid the hazards of
investment. Their other choice is to create an immediate estate
through the stroke of a pen by signing a life insurance
application.

An Immediate Estate Thus life insurance is the original

product to be old widely on the installment plan with the
“contingent owner” in full possession of the whole purchase:
In this era of taking vacation trips on an “enjoy now, pay
later” basis, of buying new model automobiles with no down
payment of spending first and paying later, life insurance remains not only
the first product to give immediate delivery with a first
installment payment, but it is still the one product whose
value increases even after that “initial enjoyment.”

Just as we believe that it is not life insurance but life

itself that creates obligations, so the immediate estate offered
through the marvel of life insurance actually makes the terms
of life easier.
 They say that annuitants live longer than others. Perhaps
the people who create immediate estates and thrust their
financial problems into the hands of their life insurance
company are no longer subject to the stresses and strains that
beset people who try to build their own estates the hard way,
the long way.

In such a fashion, they avoid the frailties of human

nature that would interfere with their voluntarily saving money
regularly; they eliminate for their families the hazards of their
not living long enough to create the desired estate; they
completely avoid the possibility of capital losses through bad
original investments or unwise reinvestment; they are assured of
a guaranteed rate of return on their money; and, most
important of all, they probably couldn’t create a sizable estate
without life insurance.

The foundation for this seemingly dogmatic statement is

the fact that people who earn sizable incomes find it difficult
to overcome the obstacle of income taxes. The more they
earn; the larger the percentage of their tax, so that the
amount they can save might never be sufficient. In addition,
the return on their investment could be subject to tax at the
top rates, and thus it is their problem that compounds, not
their investments.

Time Insurance Even those who sincerely believe that

they can do better with their money know that they cannot if
they don’t have enough time. The better their long range
prospects, the greater their need for time insurance. Thus time
insurance fill’s the gap between the amount that has been
accumulated up to present and the ultimate amount that is the
goal of the future.

Not only does life insurance assure people time to create

an estate, but it also frees all of their time from the
consuming detail necessary in building a sound personal
portfolio of investments. With life insurance giving an
immediate estate, all of their time is free - to devote to their
own business and families, and to the fulfillment of their
needs for religion, culture, and recreation. Life insurance buys
time – and puts it on the side of the prudent individual who
chooses life insurance for an immediate estate.

Let us assume, though, that a person, through great

astuteness or good fortune, has been able to accumulate a
substantial estate. The problem of preserving the estate for that
person’s heirs or distributing it wisely still exists.

Here, on one hand, we have the problem of taxes once

again. Under the tax laws of some countries, an estate of
substantial size will suffer considerable diminution at the death
of the owner unless steps to prevent it have been taken. On
the other hand, no other investment has a feature comparable
to the settlement option of a life insurance contract whereby
the principal and interest are scientifically blended and made to
last for the lifetime of the beneficiary, no matter how long
that life may be.

The successful life insurance agent in estate – analysis work

makes every effort to preserve estates through life insurance.
When life insurance is used to pay the claims of the
government, it is not necessary to dig into the heart of the
estate to sell most precious securities to meet these demands.
In addition, life insurance is frequently used as a gift during
the lifetime of the estate owner and thus both the conservation
and the distribution of the estate can be controlled.

Thus, it is not only the person of modest means who

depends on life insurance to preserve a standard of living for
survivors. The person of wealth, too, finds it a vital part of
an overall financial program.

Life insurance enables people to create estates at

once and then scientifically to control their conservation
and distribution.

“THIS I BELIEVE”