Cadin Op-Ed: The Case for Permanent Life Insurance


Last week, the Wall Street Journal published a highly-skewed opinion piece denigrating the value of permanent life insurance written by an author with no expertise on the subject. Promoting simplistic, misleading, and incomplete content under the banner of “expert” advice does a disservice to the credibility and esteemed reputation of the Journal and, more importantly, to its readers.

A thorough discussion about life insurance would show that, under any objective measurement, the product has intrinsic value and should be promoted as means to protect families, businesses, and to better secure one’s retirement.

It’s fair game to note that, under certain circumstances, term life insurance serves many consumers’ needs, but all forms of permanent life insurance provide meaningful benefits as well.

Permanent life insurance ensures the death benefit will be paid regardless of when death occurs. It can also provide solutions to address long-term care needs, as well as providing protection against disability.

Permanent life insurance can also build cash value. Certain cash values, in whole life for instance, are a non-correlated asset and cannot go down in value. While dividends are not guaranteed, they have been consistently paid since the Civil War.

Financial literature has published reams of advice about managing cashflow in a market downturn. Cash value permanent life insurance is one of the best ways to address that critical need, it cannot be restricted, even in tight credit markets and the loans operate at market rates.

If you were forced to liquidate your real estate or securities in 2008, you effectively locked in that reduced value, causing a permanent, negative effect on your savings.

Before, during, and after the Great Recession, financial security advisors, such as AALU members, have helped consumers use life insurance as an essential and flexible tool to help secure their financial futures. When no bank would lend money and the markets for real estate, stocks, and bonds were tanking, life insurance professionals helped families and businesses to access their cash values to manage their obligations. They either borrowed from their policies or used the cash values as collateral — helping to pay college tuitions, keep businesses afloat, and employees on the payroll.

This is not a new concept; Walt Disney, among many other iconic American entrepreneurs, used life insurance cash values to help him build Disneyland when he could not get financing from banks. Indeed, life insurance continued to fulfill obligations to people throughout the fiscal crisis and the Great Recession without a single carrier facing solvency concerns due to the long-term and conservative nature of carrier investments. More recently, furloughed federal employees and contractors worked with their advisors during the shutdown, using their life insurance to provide money for groceries, housing, and other expenses.

There are other forms of permanent insurance that do not build cash value but provide a permanent and efficient way of guaranteeing against a future liability.

AALU members build trusted relationships with families and work to help them realize their long-term financial goals. Every day, one of them has to deliver a death benefit, showing up and providing relief during one of the most difficult times in a family’s life, but because of responsible planning, those families have one less thing to worry about in the aftermath.

The caricature of life insurance professionals wildly misses the mark. These professionals work every single day serving the best interests of their clients, following multi-layered compliance standards set by the States in which they are licensed, federal regulators, and the carriers whose products they sell.

Life insurance and annuities are important and complimentary elements of a holistic financial plan to secure the financial future families and businesses throughout America. The American people live healthier, longer, and more productive lives as a result, something which all financial professionals should celebrate.

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This Article was originally posted on Medium. Click here to view.