A mere relationship is not the same thing as being committed. A relationship is something that two or more people enter into in order to receive a desired outcome that would be more difficult or even impossible without a relationship. When a relationship no longer satisfies, it is dissolved or ended.
Investing money is a relationship which people enter into in hopes of attaining a rate of return or return on their investment. As long as they are satisfied, an investor will continue in this relationship. But when the investment fails to produce the desired effects the relationship is typically abandoned as there is no binding obligation or duty for the relationship to continue any further.
In contrast, a commitment involves an assurance, guarantee, vow, obligation and even duty. Regardless of future aberrations or irregularities, a commitment remains unwavering and steadfast. Participating whole life insurance contracts are commitments. They are not based on attaining a certain rate of return but on a guaranteed future value for the duration.
Today, it is not common for some people to have multiple relationships, not merely with their money, but in their sexual life. Unfortunately, having multiple relationships becomes complex, both legally and emotionally, due to the lack of commitment. Some relationships can evolve into commitments, but not until there is a fuller understanding of what assurances, guarantees, vows, obligations and duties will be provided by each party. It is no surprise then why most relationships never achieve the balance and fulfillment which only commitment from the beginning can provide.
Today, markets are trending, and stocks are soaring, yet many of the corporations issuing these stocks are not increasing in value. This is a serious relationship problem because as John Bogle warned about in his book, Don’t Count On It, “Price is arbitrary, but value is fundamental.” So, in this relationship people are willingly paying more than what the value of the stocks they are purchasing are worth, in hopes the price will continue to go up so they can earn a return on their investment. But this relationship will end sooner or later because the desired effect, a return on investment, cannot be achieved because prices will return to their real value at some point in the future. They always do. This is nowhere better illustrated than with the historic craze which is now known as “Tulip Mania”.
“Prior to 1633 trading tulip bulbs was restricted to professional growers and experts.” But when middle-class and poor families were allowed to speculate on the tulip market, prices soared. In 1637, prices flattened to value and thousands of people lost their homes, farms, businesses and savings, which they had used as collateral to purchase overpriced tulip stocks. This is thought to be the first historical price to value stock bubble correction, yet it has been repeated thousands of times since then with different commodities and/or stocks.
Regardless of this volatility, whole life insurance has paid claims since 1759 when the Presbyterian Ministers Fund (the first life insurance company in the United States) was founded. In 1918 when 675,000 died from the flu, life insurance was there to cover the losses. In 2001, $40 billion was paid by life insurance companies to compensate the families of victims of the terrorist attacks on the World Trade Center in New York City. In 2005 when Katrina wreaked havoc on our gulf coast, life insurance was there again to pay $104 million dollars to the families of those who lost their lives.
Life insurance is a commitment between an insurance company and the person who purchases a policy. But life insurance is also a commitment between whoever purchases life insurance and the people they love and care deeply about. As a commitment, life insurance provides the assurance, guarantee, vow, obligation and duty to take care of those you love and respect when you are no longer there to take care of them yourself.
There’s a big difference between a mere relationship and a commitment. Those who are committed obligate themselves to provide for their own. It is their sense of duty, a source of pride and a great assurance. A mere relationship, however, is primarily concerned about “What’s in it for me?” This nearsighted and narcissist outlook leaves both parties vulnerable, without assurance and with no sense of pride or duty.
At Life Benefits, we have noticed people who are committed, purchase life insurance and those who are not committed, don’t. At the same time those who want to get rich quick with investments usually overlook the value of life insurance because they are too focused on price, instead of value.
The guarantees and the history behind life insurance contracts demonstrates the commitment necessary to provide for the future regardless of what aberrations or irregularities may come. We always welcome those who are ready to make a commitment. At the same time, we diligently work with those who appear to be wanting a relationship…never giving up hope that they too will become committed.
Dr. Tomas P. McFie
Most Americans depend on Social Security for retirement income. Even when people think they’re saving money, taxes, fees, investment losses and market volatility take most of their money away. Tom McFie is the founder of Life Benefits which helps people keep more of the money they make, so they can have financial peace of mind. His latest book, How to Build Sustainable Wealth, can be purchased here.