God Proofing Your Life?
When is enough insurance enough?When a man supports his family on a $30,000-a-year salary, should he buy a life insurance policy that pays $2 million when he dies? Jesus never answered that specific question in Scripture, but He talked about money more than He talked about heaven, hell or even prayer. And he had wise words for any man sorting through all the possible insurance decision he needs to make.

If you want to protect your family, without throwing your money out the window, remember these financial tips before you make another deal with your friendly insurance salesperson:

You are a steward, not the owner. When I took my family to a hamburger joint the other day, I paid for the other meal, and my sons thanked me. But in the middle of the meal I reached over and grabbed one of my son’s fired and popped it in my mouth. (I don’t recommend doing this, especially if your sons are bigger than you.) And my son said, “Hey, those are my fries!” How quickly we forget, I thought.

God owns it all says Psalm 24:1: “The earth is the Lord’s, and everything in it.” He gives to us as He pleases. And if we are average Americans, He has entrusted us with a lot. If a man averages an annual income $25,000 over a 40-year-period, he will manage more than $1 million in his lifetime. Let’s manage it well.

Everything in this life is temporary. It’s silly to waste lots of time, money and effort to ensure that all you have now will always be yours. On the other hand, it’s also foolish not to consider what would happened to your loved ones if you died—or became sick or disabled—tomorrow.

Money should not be hoarded. Hetty Green lived in shack. She ate cold oatmeal because heating it up would increase the electric bill. When her son injured his leg, she searched so long for a clinic offering free medical treatment that gangrene set in, and his leg had to be amputated. But Hetty was not poor. When she died in 1916, she had an estate worth more than $95 million! One bank account alone had more than $31 million in it.

Is it possible to be too frugal? You bet. Is it possible to save too much money? Absolutely. If you disagree, check out Luke 12:16-21, where Jesus talked about a rich man who hoarded his money and was condemned by God.

It should not be our goal to hoard up so much insurance that if a catastrophe were to hit us, we wouldn’t have to work another day in our lives. If you have accidental death insurance, dental insurance, credit card insurance, a cancer policy, property and casualty insurance that covers every conceivable event and so much life insurance that your premature death would make your survivors much richer than they ever would have been otherwise—then you are overinsured.

When we stockpile too much insurance, we may be trying to control our own future. Jesus said, “Don’t worry about tomorrow. God clothes the grass of the field and God provides for the birds of the air, God will take care of you.”

Expect some hard times, and prepare for them. Like the prodigal son in Luke 15, many of us have acted as though hard times were not a possibility. We have taken for granted our stable economy, which could soon end. But even if the economy remains stable, we need to anticipate personal famines.

Jesus told us not to worry, but He also said: “Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it? For if he lays the foundation and is not about to finish it, everyone who sees it will ridicule him, saying, ‘This fellow began to build and was not able to finish’” (Luke 14:28-30).

We should trust that God will take care of us as He has promised but a wise planner also allows for some of the famines that may appear in this life. In Genesis 41:47-49, Joseph had the wisdom to plan for the coming seven years of famine during the seven years of prosperity.

Some Christians can excuse their foolishness by claiming they are simply “trusting God to provide.” Perhaps God is providing for you right now, in anticipation of a famine that is coming in a few years.

Bottom line: There is a place for insurance in a Christian’s financial plan. The tips below will help you decide how much is best.

1. Determine your goal. For example, life insurance exists to help survivors cope without unreasonable financial burden. The need can be determined by calculating indebtedness and living expenses. If $75,000 is needed to pay off the mortgage and $20,000 for assorted debts and $5,000 for funeral expenses, then a total of $100,000 is needed for debt retirement. When calculating living expenses, remember that the family without indebtedness and with one less mouth to feed needs less income. The goal should not be to leave a rich widow.

To calculate the needed income for survivors, consider Social Security benefits, savings, number and ages of children, the earning capability of the spouse (your spouse may need to stay home with the children), interest earned on insurance benefits and even the possibility of remarriage. (Keep in mind that Social Security provides nothing for a widow without children under age 18, until she reaches age 60.)

Living expenses for survivors will vary widely, but when the amount needed to eliminate debt is added to the amount needed to cover living expenses, one can arrive at the total life insurance need.

2. Be cautious in using insurance policies as investments. If most of your savings is tied to an insurance policy, you are probably out of balance. Buy insurance as insurance, not as an investment. Take the same amount of money you would spend on a premium for a cash-value insurance policy and invest it wisely each month.

In his article, “Choosing Life Insurance That’s Right For You,” financial specialist Michael Cave writes, “Just as we don’t build mahogany staircases for fire escapes, it’s best to insure basics—to do the job without under expense.” He advocates buying term life insurance instead of cash-value policies and investing the difference, but adds this qualification. “Term insurance cannot be continued indefinitely—through your 60s and 70s. You’ll need to become self-insured before it ends by repaying debts and building other assets for your family.” Only a cash-value policy can continue indefinitely. Those who know they won’t succeed in becoming self-insured, or who want insurance indefinitely for paying estate taxes, should purchase whole life.

3. Weigh the risk. Ask yourself two questions: (1) What are the chances of this catastrophe striking me? and (2) What would happen if I did not have this insurance policy when the catastrophe struck me? If the chance is reasonable and the result is costly, insurance would probably be wise. If the chance is remote and the result is fixed or limited, don’t buy insurance. Save some of your resources to cover those expenses.

Since most of us only have a limited amount of discretionary income—maybe $100 a month or so—it isn’t wise to spend $150 a month on insurance and not use some of that money to accelerate our mortgage payments or save for other emergencies.

4. Discover what is really catastrophic, and cover it. Things that have limited costs to them, like most personal items, do not need to be insured if you could afford to live without them. Insure against those things that would be difficult or impossible to replace if the catastrophe would hit. In case of a medical crisis or an unplanned pregnancy, could you pay the health bills? If you were to die, could your spouse continue to provide for your family? If your house was to burn down, could you pay off the mortgage? Insurance is usually a wise expenditure (and sometimes mandatory) against these high-risk scenarios.

5. Replace insurance with savings whenever possible. As you get older, your insurance needs should change. You should need less life insurance, for example, at age 70 than you do at age 30. When you are 30, you may have a wife and children who depend on you income, and you probably have some debts on your house and other monthly needs, as well as future expenditures like education for your children. You should consider their burdens if you were to die suddenly.

But when you are 70, your goal should be to have enough in the bank to cover your funeral expenses, pay off your debts, and allow your wife to maintain her standard of living for the rest of her life.

6. Get a second opinion. Whenever making financial decisions, listen to wise counsel. When you are considering insurance needs, get opinions from Christians of varied backgrounds. Don’t lock yourself into an insurance policy that a friend is trying to sell you before first getting the advice of a financial advisor who has nothing to gain.

7. Have only enough insurance to cover your needs. Unless you are much more catastrophe-prone than the average family, you will pay more in insurance over the course of a lifetime than you will in benefits.

Once again, buy enough insurance to cover your expenditures, not to make you rich or to keep you from having to work the rest of your life.

When you are deciding how much to spend on insurance, don’t consider how much insurance will make you feel secure or how much will make your kids wealthy after you die. It’s better to ask, “How can I be the best and wisest steward of what God has given me?”

If you honestly confront that question and take action, let God do the rest.

By Bob Russell, former senior minister at Southeast Christian Church in Louisville, Ken.