Are You Over-Insured?
Is it possible to be over-insured? The answer - No! Every life insurance company’s underwriting department is designed to make sure the no one is over insured. One of the ways this is done is by evaluating someone’s Human Life or Economic Life Value. In addition to the insurance industry other professions use this concept to evaluate the value of someone’s life. Attorneys use it when litigating wrongful death lawsuits and the 911 Commission used this as a basis for distributing funds to victims’ families after 911. So, what is this concept of Human Life or Economic Life Value?
Human Life Value or Economic Life Value Concept has evolved over the ages. Some of the first discussions about this concept date back to William Petty and Richard Cantillon in the 1600-1700s. But the best definition of this concept can be explained by Solomon Huebner, author of “The Economics of Life Insurance”. He says, “That value may be defined as the capitalized monetary worth of the earning capacity resulting from economic forces that are incorporated within our being: namely, our character and health, our education, training, and experience, our personality and industry, our creative power, and our driving force to realize the economic images of the mind. Were it not for this value, there would be no property values. The human life value is the cause rather than the effect, the permanent producer rather than the temporary product”. Given this definition, doesn’t it make sense to protect this most value asset? After all, we purchase insurance to protect the value of other assets, such as a home, a car, or a cell phone. Why wouldn’t you want the same protection when it comes to the value of your life?
Although this seems like a very logical thing to do, America is ranked last among large industrial countries in terms of per capita spending on life insurance. These shocking statistics show how in the dark Americans are on the benefits of life insurance and the value of protecting themselves. When it comes to protection many are spending more time and money protecting their assets than the creator of those assets. Does that really make sense? It’s like protecting the golden egg rather than the golden goose.
Don’t get off track when it comes to insuring your most important assets of all - your human life value. You at least deserve to know what your full replacement value would be, then you can make the decision whether or not to protect that fully. Talk to your Leap adviser to learn more.
*Dyke, Barry James. The Pirates of Manhattan: Systematically Plundering the American Consumer & How to Protect against It. Portsmouth, NH: 555, 2007. Print.
*Huebner, Solomon Stephen. "Economics Of Life Insurance." Goodreads. N.p., n.d. Web. 16 Sept. 2016.