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Illustrate purpose of life insurance in picture

Why Do People Buy Life Insurance? (Updated 2020)

Life insurance is purchased for three reasons.

  1. Estate Creation: from the moment you are protected by a policy, the people you care about will be provided for if you pass away.
  2. Estate Preservation: when estate or death tax must be paid, a life insurance policy can be a way to ensure that you don’t have to sell assets harder to turn into cash, such as a house.
  3.  Protection: when a primary income earner passes away, a life insurance policy can be built to provide enough money to pay for the surviving families’ living expenses.

All of these reasons for purchasing a life insurance policy have the common theme of providing money to the beneficiary of the policy. That is exactly what a beneficiary is: the person, or people, who receive the benefit. On the other hand, the policy owner is the person who pays the premiums, and the insured is the person who is protecting the beneficiary.

Typically, the policy owner and the insured are the same person, but they don’t have to be. When the insured passes away, the beneficiary typically receives the death benefit, or the amount of the policy, tax free. There are some exemptions to this rule, as is typically the case with tax laws (sigh…).

Types of Life Insurance

There are two types of life insurance, term and whole. Term life insurance provides protection for a specified period of time. Whole life insurance will provide a benefit (as long as the policy holder decides to keep paying the premiums, or other exemptions don’t apply), and can be paid out to the policy holder if he or she lives to a certain age, typically 121.

Whol Life Insurance

Whole life insurance policies can accumulate a cash value, which typically amounts to the amount paid in excess of the cost of the insurance and the fees. Also, the amount paid is put in an account and gains interest.

Because life insurance premiums are paid with after tax dollars, the amount of premiums paid is not taxable, but the interest can be. It is typically not taxable if paid to the beneficiary upon death of the policy holder, but if the cash value is withdrawn it may be. It also grows tax deferred in the insurance companies “general account”.

Sometimes, the policy owner will take a loan against the death benefit (usually not exceeding the cash value), which would mean that, although they would pay interest on the loan amount, they would not have to pay taxes on the interest upon receiving the money. If you do purchase a policy, all of the specifics will be explained to you so that you understand.

Indexed Life Insurance Policies

A newer option for life insurance is to index the amount paid to the stock market. The cool thing about these sorts of policies is that, although you can gain when the stock market goes up, you are protected if the stock market goes down.

This may be a good option because the economy has historically gone through economic cycles of expansion and contraction, where the stock market goes up and then it goes down. An example of a contraction would be the Great Recession of 2008. The average length of an economic expansion is 58 months, or just under five years. The United States is currently in the longest expansion in history.

If history is to repeat itself, as it usually does, we could be due for an economic contraction, or recession soon. This means it may be a good time to use an indexed financial product such as an indexed annuity of indexed whole life insurance policy.

The Bottom Line

If you are interested in learning more, please contact us! We are also looking to hire. Please see below channels to contact.

Elasticity & Agility on AWS

Value is a Value Prop

Sage Market is about adding value to your business by first applying existing technologies. This article is going to talk about a couple of the value proposition that Amazon Web Service’s technologies offer: agility and elasticity. More importantly it is going to discuss why these value propositions are important. By the time you finish reading this, I hope it will be clear why Sage Market is worth your time.

The plan for Sage Market is to become part of the Amazon Partner Network, among other things. This means Sage Market will be an Amazon affiliate, being knowledgable of the Amazon product catalog and experienced in deploying the solutions. Additionally, it will bring a breadth of knowledge about how to apply technology in other ways to grow and improve the business.

Amazon Products

Amazon Web Services is a suite of tools that allow businesses to take advantage of technology in some important ways. It allows you to serve your customers better because it offers agility and elasticity. Agility means that you can experiment quickly and cheaply. Elasticity means you can scale your business to meet surges in demand that might otherwise cause your system to crash. Let’s talk a little more about what this means, starting with agility.

Agility: Smart R&D

Businesses today face a seemingly insurmountable challenge: innovate or be squashed. You might say to me, “that’s all good and fine, but I’ve been around for 70 years. I have got nothing to worry about. Besides, I couldn’t put people out of work by innovating. That would be heartless.” To this, I shake my head and grimace.
 
Both political parties are growing tired of free trade and globalization, fueled by fear of the masses. They have a secret, though. As populism rises and manufacturing is incentivized in future legislation, state of the art plants will increase production.
 
These plants will, much to the dismay and surprise of the populist movement that hates losing their jobs, use automation and hire a fraction of the workers.

 

There will be new entrants that come into the market and compete with this state of the art capital, even if you don’t. They won’t even have employees that they would lay off with the new technology. They’ll sure have an incentive to automate your manufacturing business cheaply, though.
 
Any incumbent business owner who has benefited from competitive advantage to profit for years should be investigating how the recent tech boom will affect them. If they have even a shade of foresight they will be researching and experimenting with how they can use technological advancement to fend off the future of specialized labor that will be AI.
 
What is the best way to do this? Cheaply and with minimal risk, of course. This is what agility is. It is the ability to experiment with your finger on the pulse of your business, reading and analyzing your data in real time to pivot or embrace whatever it is your are experimenting with.
 
Amazon has tools to optimize this process. Now, agility is important, but how can this be possible? Elasticity and agility are so related it can be confusing to decouple them in the mind.
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Elasticity Universal Truth

Elasticity is being able to react to market activity in real time. It means scaling your activities in direct response to what your customers are doing. This is simply good customer service, but it is also cost effective.

Just as important to the bottom line as increasing sales by being responsive is to minimize costs. It is also great for the environment, so by being responsive to your customer you will save the planet and attract more customers.

Any business savvy individual knows that a dollar saved is a dollar earned. If you are chasing dollars for your business, whether that be for society’s good or to buy a new car to show off to your neighbor, there is no difference between a dollar from cost-cutting or sales-increasing. This is a universal truth.

Get Involved

If you are serious about staying relevant in the changing landscape, it is cheap to get started. I will work with you and create a quote for you and your business for free. If I can’t add value, I would not even think of charging a dime.

Additionally, I am looking for people that are ambitious about applying technology to change the world in a positive way. Sage Market is in it’s infancy, but it has a positive future, just like us. Check out our social media channels, or e-mail us at support@sagemarket.info.

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