A Different Look at Life Insurance

Like most people, I recognize that I am going to die someday. Unlike most people, I have a lot of life insurance.

I've come to the conclusion that we really need more life insurance agents. Too many people need more insurance than they have.

I started my career in life insurance and annuities. All of the initials behind my name are related somehow to the insurance industry.

I am a true believer. I practice what I preach.

I have purchased a number of life insurance policies on myself to achieve different goals.

I have a policy that will help endow a law school scholarship and another that will support a scholarship fund at a college.

Few people think to purchase life insurance policies for their charitable donations, even though the concept has tremendous tax and planning benefits.

The concept of buying life insurance unnerves most people.

Life insurance forces people to deal with the idea that death may come and come in an untimely fashion.

It was impossible for some people to get their arms around dying. I had a medical professional spend hours explaining how he was sure he was going to live to 90. He died at age 50. I hope someone else convinced him to get insurance, but I suspect they never did.

Although I am going to help charities and do other things, the bulk of my insurance is designed to assist my family. Most people buy life insurance with their families in mind.

I don't think that as many think about the next step.

What will the family do with the money?

When you hear that 90% of people who receive a lump sum will blow it in five years, some people conclude that life insurance is futile.

Why give your family a lump sum and have them blow it?

Most insurance policies have options to pay out over time, but few people use them. It limits them to the terms, rates and restrictions of the insurance company.

Thus, I came up with a simple system. My life insurance is owned by a trust. When I die, the trustee will buy annuities for the beneficiaries. The annuities will pay monthly for the rest of the beneficiaries lives and increase at 3% a year.

When I die, I want to assure those people will have money for the rest of their lives. They won't be susceptible to quick-buck artists and outside pressures.

A lot of hasty decisions are made when a family member dies. Many of them are bad. There seems to be an army of vultures waiting to prey on the vulnerable.

As Glenn Frey once said, "The lure of easy money has a very strong appeal."

I don't want my family to be in a position where a "friend" can burn them after my death.

That is why the combination of life insurance, a trust and lifetime annuities works for me.

Don McNay, CLU, ChFC, MSFS, CSSC of Richmond Kentucky is an award winning, syndicated financial columnist and Huffington Post Contributor. He has Masters Degrees from Vanderbilt University and the American College and is in the Eastern Kentucky University Hall of Distinguished Alumni.

McNay is a lifetime member of the Million Dollar Round Table and has four professional designations in the financial services field.