Web Exclusive: Optimist's Outlook (Dec. 1989)
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By Benjamin N. Woodson, CLU
A Classic Back Page from the late Woody Woodson
The approach of the ultimate decade of our 20th century, and surprisingly soon thereafter the beginning of the 21st century itself, suggests that it is timely to record here some reflections about the prospective state of life insurance and life underwriting in the years ahead. Technically, January 1, 1990, is not the beginning of the decade of the nineties, which will not arrive until December 31, 1990. But it is evident that public expectation has clearly fastened on the forthcoming January 1st as the beginning of the final decade of the 20th century. So I yield to public opinion, and agree that the beginning of the final tenth of our century is at hand. Now, therefore, let us view in broad perspective the new decade and the new century that will follow, and take a thoughtful look at the future - prospective, possible, or probable - of our product and our work. And let me acknowledge that I am motivated in some part to offer these guesses by a handful of friends and acquaintances who have lately asked my views in these areas. In effect, they ask whether I feel that life insurance might have become a vanishing species, or whether I believe that the golden years are behind us, or whether I would advise a son or nephew or grandson to embark upon a life insurance career. This month, therefore, I offer my views on our product.
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As to life insurance itself, let me say at once, and emphatically, that I believe our basic product is not in any way beginning an era of declining demand or declining use. Quite the contrary. Life insurance is not in the same category as high - button shoes, or tight-lacing corsets, or lightning rods, or steam powered automobiles, or tire chains, or stereopticon slides and viewers. These all went into permanent decline and then ultimate disappearance when changing tastes and the evolution of better alternatives doomed them into extinction. But life insurance is not an item of diminishing appeal and diminishing use, pointed toward ultimate disappearance like the fabled dodo. It is here to stay because the constant and increasing needs for the basic services of life insurance are here to stay.
I am totally convinced that life insurance itself, group and individual, will thrive and survive. And will not merely survive but will enjoy ever greater use and ever increasing popularity and public acceptance, as demanded by the constantly increasing complexity of life in an industrialized, monetized and civilized world. The basic need for life insurance rests upon three fundamental conditions that presently exist in our world and our civilization. These three conditions are: first, that life is uncertain; second, that love is here to stay - that men and women love their spouses and their children, and even their businesses, and often their charities (church, college, hospital or library); and third, that money is an essential ingredient in our complex economy, not because someone might die but because someone else must go on living. Now I submit to you that if life ceases to be uncertain, so that all of us - repeat all - know that we will live to retirement age and beyond, then life insurance might indeed become a vanishing species. (Even so, it would continue to have great value as the ideal means of prepaying estate taxes.) If our civilization should abandon the family concept, and men and women live in communal existence in which marriage was unknown and children would not know their parents, there would be little of no use for life insurance.
Similarly, if our life developed into a communistic state, where "Big Brother" provides everything and there is no such medium of exchange as money, then men and women would have no needfor life insurance and none would exist.
But unless these three negatives should come into being, more and more individuals will need more and more life insurance across the years ahead.
Life insurance is our monopoly. The law requires that any financial service involving life contingencies must be produced and offered for sale only by a legally defined life insurance company and there is little likelihood of change in this area. And life insurance in its present form, whether interest sensitive by design or structure; or interest sensitive by policy dividends, obviously does involve life contingencies. Therefore, it is in our province to offer a service so critical, so fundamental, that it cannot be matched for all around financial planning by any other form of investment. Of course there are myriad uses for forms of investment other than life insurance, but the life contingency factor is essential to any total financial plan.
Today it is somewhat fashionable to avoid calling life insurance an investment. Well then, mark me as unfashionable. I endeavor to accommodate those who consider "investment" to be a dirty word when applied to life insurance, my concession being to use the word "property" instead. I do this in quest of domestic tranquility, even though some of those who would deny me the use of the word persist in calling diamonds and objects of art "investments!"
But now and then, no matter how much I endeavor to use the word "property" instead, I suffer a slip of the tongue and the ugly word pops out of my mouth. When that happens, I do not apologize for my unthinkable offense. For I am committed to speak of permanent life insurance as an investment, and as a very good one - as my own life insurance in particular, will crown a glorious past with a brilliant future. I expect life insurance to move ahead at a rate of growth exceeding that of the past, as the estate tax makes the purchase of life insurance mandatory, and as the education and sophistication of the buyer increases in proportion!
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