A JN Life Insurance financial advisor is urging Jamaicans to make life insurance an integral part of estate planning.

Deon Graveney, who was a guest speaker at Rotary Club of Trafalgar New Heights’ recent meeting, highlighted that the the lump sum payout life insurance provides can be used to settle a loved one’s debt, in addition to covering funeral expenses and expenses related to illness before death, or diagnosis of a critical illness.

Speaking on the theme ‘Life Insurance as a Tool for Generational Wealth’, she told the audience that one of the main purposes of insurance is to indemnify you against loss arising from risks of death and debilitating illness. Graveney emphasised that insurance helps to mitigate any damages posed by risk of death, disability, critical illness, or early retirement, by paying out a lump sum from a pool of funds to assist families in difficult times.

“Life insurance is not a bad thing. However, many people are still hesitant to invest in it,” she affirmed.

“Not everyone will be diagnosed with an illness, but there are those among us who will develop a critical illness or lose a family member, and that is where insurance becomes important because it’s better to have it and not need it, than to need it and cannot get it. It provides financial protection against losses that come with major illnesses or death,” the financial advisor continued.

Graveney outlined that the need for life insurance is grounded in the rationale of a person’s economic value, in terms of the monetary value they have to their families or to their companies or businesses, expressed as their total net future earnings if they lived to their full life expectancy.

“If you live long enough and are healthy enough, then your total income potential can be realised to the benefit of your family or your business. However, if you die prematurely, become ill or are affected by some disability, then some or most of your income potential will be lost and your family may, at worst, become destitute, or at best, are reduced to a standard of living much less than what they’re accustomed to. Life is uncertain. Illness and disability are highly probable and death is inevitable. This is why life insurance is essential,” she further explained.

While many people hope that life’s circumstances could be accurately predicted so they can be prepared for it, Graveney said this is not the reality.

“Owing to these uncertainties, the hardship and damages resulting from these risks can be mitigated using life insurance to ensure our loved ones are not challenged to survive. If we knew when we were going to die then there would be no need for life insurance,” she said.

“You would be able to accurately calculate how much income and saving you would need to have to take care of your financial responsibilities and obligations or for your retirement. A life underwriter once met an objection with a prospective client who said he would not die for now. In trying to close the sale the underwriter asked him to write down the date of his death and mode of death so he could explain to his family that he had it under control and did not need life insurance. Of course, he closed the sale because he made a valid point with the prospect.”

Graveney pointed out that life insurance as an estate planning tool was important, especially for individuals who are breadwinners, because their families’ security is tied to their economic value.

“If we knew the date of our deaths, then we could systematically save the amount of money that we would need to take care of our loved ones. However, we don’t know when death or illness will occur, and this is why we need to create an estate just in case we get sick then we won’t be bankrupt, or if we die our loved ones will be taken care of, and we can die tidily,” she noted.

Quoting Glenn Stevick Jr, the financial advisor described life insurance as the ‘Swiss Army knife’ of financial products because of its multiple uses.

“It provides a death benefit to your family; it creates an estate the moment you pay your first premium because it will provide a lump sum to your family upon death or diagnosis of a critical illness or disability. It provides liquidity for estate expenses. It also provides an income for those left behind,” she noted.

“It can be used to secure a line of credit, creditor mortgage protection, it forms a buy-sell agreement for businesses and even provides future insurability, for instance with the JN Life Aide a critical illness policy that pays you a lump-sum benefit upon first diagnosis of an illness, pays again for re-occurrence of the same illness and pays again for an additional occurrence of a totally different illness. This is very useful because once you’re diagnosed with a critical illness, you’re not eligible for a critical illness policy,” she continued.    

She revealed that life insurance also had other benefits.

“It can also be used to pay estate taxes, funeral expenses, last illness expenses, pay your creditors and many other things. Do not underestimate the enormity of these expenses, which can leave your family in debt,” she emphasised.

“You can leave millions for your heirs, and they get disinherited because of estate and final expenses. Therefore, I urge you to make life insurance an important part of your estate planning because of the benefits that it has. You cannot bring back a loved one or prevent an illness with life insurance, but it can buy you time, and beneficiaries will have funds to settle outstanding expenses. This way your wishes will be fulfilled and your legacy passed on to your generations,” she added.