Life Is Love

Early in my career, a life insurance company asked me to hand-deliver a death benefit check to a widow who lived near me. The husband had been a business owner, and their livelihood depended on the continued success of the company.

On a beautiful, spring Georgia day, the couple’s daughter was married at the family home. After the nuptials, the reception was held in their backyard. While guests enjoyed the celebration, the bride’s father took a quiet moment to impart some wisdom for the journey ahead.

Just as he turned to say something to his daughter, he collapsed. The widow later told me that he had died immediately of a massive stroke.

Lesson of love
Years earlier, the patriarch had realized that money would be needed if something bad happened to him. He loved his wife and family and wanted to take care of them. That’s why he bought life insurance through his company.

When he took out the policy, the couple could never have guessed that years later one of their best days as a family would quickly turn into one of their worst. Nor could they know that because of this simple financial transaction, their tragic day emotionally wouldn’t be compounded by financial instability.

Because of his act of love, life insurance proceeds were available after his death to help pay for the wedding, provide his widow with an income and help the family wind down his business.

It turns out that this was the only life insurance death benefit I ever delivered. I’ll never forget the lesson. You buy life insurance because you love someone.

You owe it to them and to your company
Of course, love isn’t the only reason to buy life insurance. In business, there are many reasons.
Buying life insurance on a key person is one good one. You owe it to them and to your company.
If a key person dies, the company stands to lose financially. The company may have its debt called.

The loss of life may result in lost sales. Finding a replacement could be an expensive and lengthy endeavor.

And some of the company’s financial loss may be because the business owes that person’s heirs money. For example, if a key person owns stock in a closely held business, life insurance proceeds can be used to buy the stock from the key person’s estate.

Similarly, if that executive has a deferred compensation agreement with the company, life insurance proceeds can generate the liquidity needed to make good on the promised compensation.