Is Insurance an asset or liability?

Before I was in this line, I've listened to different financial advisors with regards to insurance.

First time round, I was forced to listened to this "ex-major" who came to BMTC to tell us about how dangerous army was and is.

He was like saying something along this line, "You guys are combat soldiers, you guys need to do SOC (standard obstacles course), what if you break your arms during that training! who is going to take care of your mother! Don't just think about yourself, think of your parents who brought you up! This plan will compensate you blah blah blah amount if you break your arms during SOC!"

Of course, I didn't sign up! AND I AM still in 1 complete piece.
(When you are in camp for the 1st time and for the 1st week, really! that's the last thing you want to hear!)

Day 2

There are these few pretty ladies(well perphaps when you're in camp for 2 weeks, any lady seems pretty) from another local insurance company coming in to talk about saving plans, you young and handsome boys, if only you save this month of money every month, by the end of XXX amount of years, you can receive xxx amount of money.

The talk this time round seems better and more positive instead of death, breaking your arms and legs!

Still, I didn't sign up!

As much as i know even before i'm in this industry that insurance is a necessity instead of a luxury, I hesitate to sign up.

So for all my friends out there who refused to do anything with me, i totally felt what you're going through.

That brings us to our main point today,

Is Insurance an asset or liability?

I think we all should know 1 thing about insurance.

You cannot buy it when you need it.

So when should we buy ?

Before we need.

So you might or might not need them throughout your entire life.

So paying money for something that you might never get to use, doesn't that make it a liability?

Then when you need it, doesn't it immediately make it into an asset?

So to answer that question, Is it an asset or liability.

You have the answer.

If today, your concern is you need the money for your dependents until they can become independent, it's an asset.

If you need this amount of money for your retirement and a policy can do just that, it's an asset.

If your concerned is providing for your family when you're not around and an agent come around selling you an investment plan, that investment plan is a liability to you.

Yet the very same investment plan is an asset to somebody who is planning for retirement or for child's education.

An insurance plan is just an insurance plan.

But an agent who comes along who is able to identify what you need and sell you a correct plan to fit your needs, that agent is an asset to you.

Insurance is a very important piece of investment which you want to have in your portfolio, however, it's not the ONLY piece of investment.

Instead of trying to find the perfect piece of insurance to fit your life, instead try find the perfect agent who is able to help you to identify your needs.

As much as there are agents who can be asset to you in your life, there are agents who will be a liability to you.

Selling based on commission and returns instead of selling according to your needs.

Or just to give you an example to bring across the point,

Client is in his 40s and is in good health, doesn't have any medical plan.
Yet the agent sell a $5000/yr premiums investment plan and walk away.

3 months later,

Client is hospitalized and the bills came up to be $100,000.
By selling a hospital plan of let's say, $400/year, he could have save that $100,000.

So a better question to "Is insurance an asset or liability" will be " Is your insurance agent an asset or liability?"

In our next session, I will discuss on my personal opinion about questions to ask your insurance agent to identify whether he/she is suitable for you.