Your insurance program;

              by Carlton Smith
One time-worn artifice in the insurance
salesman's bag of tricks is known as
"backing the hearse up to the door." To
the mournful dirge of the salesman's
solemn tones, the prospect is made to see his mortal re­mains
begin their journey to the graveyard, while his
tearful widow and orphans ("your loved ones") face a
financially bleak future, hard pressed to keep a roof over
their heads and pay the butcher and baker.
More-professional salesmen tend to deplore the tactic
as a shoddy gimmick. Its users argue that the typical
prospect for life insurance has the curious notion that "it
can happen to the other guy, but it won't happen to me"
—not just now, at least—and. keeps putting off buying
insurance until, perhaps, it's too late.
It is true, certainly, that most of us have an aversion to
accepting our own death as an ever-present possibility.
If, however, you want an objective and realistic answer
to the question "How much insurance do I need?" you
have to face the possibility that you might lose an
argument with a truck at 4:36 tomorrow afternoon.
Statistically, you have comfortably long odds in favor
of your living to the ripe old age assigned you in the
insurance company's life expectancy tables. But if you
are going to count on that, you are saying you don't
need any insurance.
Getting the right answer to the question above begins
with the fact that if a healthy twenty-five-year-old Ameri­can
male stands up in line with 1,130 others of like de­scription
(or some such number, depending on whose
mortality tables you believe) he can be pretty sure that
for one of them the hearse is going to back up to the door
some time in the next twelve months. And if that one
just happened to be you...how much insurance would
your family need?
It is important to work out your own individual answer
beginning with this ruthless assumption, because other-
'wise you might get your calculations confused by con­siderations
of "insurance as an investment^' and other
secondary uses to which it can be put. The primary pur­pose
of life insurance—the one that comes ahead of all
others—is protection. It is fine to take into account the
other possible uses of life insurance—such as providing
retirement income or funds for college education, etc. —
but only after you are satisfied' that your family has
adequate protection against loss of the primary bread­winner's
income. If it just happens to be you for whom the
bell tolls tomorrow, or next week or a year from now, any
insurance dollars spent on secondary purposes at the ex­pense
of protection will have been painfully misdirected. So, first things first. As one philosopher ob­served,
"if two men ride a horse, one needs
must ride behind." Keep protection up front
where it belongs and let other things come
behind—if there's any room left in the saddle.
Determining family protection is a two-part question:
How much insurance do I need, and what kind? It is dif­ficult
to address yourself fruitfully to the second part
until you have some numbers to work with—that is, an
answer to the first part. Fortunately, getting the numbers
is fairly easy. Many insurance men use a sales approach
known as "programming your insurance." This technique
produces a graphic answer to the question of "how
much," often an impressive array of figures and charts in
a thick binder. You can do your own programming by
applying a standard formula.
irst step: Calculate, or estimate, as accurately
^ • ^ H as you can, your survivors' monthly income
needs if you were suddenly to become a vital
-M . statistic. Carry this out to the year when the
youngest child will have finished college. Couples as yet
childless, whose plans call for having a family, should
include the intended number and approximate time of
arrival of each child.
Unless you keep much more accurate track than do
most families of where the money goes, start by breaking
down the family's current annual expenditures into
major categories. The bottom line should be the year's
total outgo. Consider each category and ask yourselves
how it would change in the event of the breadwinner's
death. You will have to answer such questions as whether
the family would continue in your present home, if you
are homeowners, or whether they would need that
second car, if you are now a two-car family. Your current
commuting costs can be eliminated, along with premiums
for any life insurance you now carry, and other personal
expenses. This step requires detailed analysis and
perhaps a little crystal gazing. In projecting future years'