Life Insurance Dividends and Ultra Strategy: Part One

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Life Insurance DividendsOne of the unique things I’ve been privileged to do in life is run a few ultra-marathons. Some of my friends think I’m crazy.

When you are preparing to run an ultra-marathon it takes a tremendous amount of discipline, patience and months of training. You need to pave yourself, establish a proven routine, and keep the routines you commit to, not only throughout your training, but during the race as well. An experienced runner knows there is tremendous danger in changing up the routine during the actual event. Doing so risks physical injury, or worse, being unable to finish the event itself. Runners refer to this tragedy as a “DNF” (Did Not Finish) and for the majority of ultra-marathoners, it’s the worst thing you can do. An ultra-marathon is, after all, about the satisfaction and reward of getting across the finish line. Though we don’t all run for the same reasons or at the same pace and employ different strategies and techniques along the way, we all run to finish the race. A DNF is simply not an option.

During my first 50-miler, my support crew consisted of my wife and two of my children. They knew my training routine and race strategy, and every five miles I’d rejoice to find them on the side of the road with my goodies (code for fuel), words of encouragement and interesting looks of amazement. They thought I was crazy too, but now they found themselves smack dab in the middle of ultra-marathon culture. All day long they labored in waiting at different locations for me to show up. I’m not sure if it was harder for them or for me. They were so patient and concerned with my progress and welfare. When I arrived, they encouraged me, refilled my hydration bottles, gave me something to eat and sent me off to run another five miles. I wasn’t fast but I was consistent and, as a result, I finished with a great time and accomplished something that prior to that experience I didn’t know I could.

Several years before I got into ultra-marathons I discovered the power of dividend paying whole like insurance and embraced it as a powerful financial vehicle in my own wealth strategy. One of the great features of traditional whole life insurance is that it pays a dividend, in addition to a guaranteed return on cash accumulation. Though the dividend is not guaranteed, one doesn’t need to look far to see how good mutual companies have an incredibly consistent track record of paying dividends to their policyholders.

A mutual company is able to do this because of its ability to focus on the finish line, moderate its paces, and employ a proven strategy for getting there. The bottom line is that they are incredibly disciplined in the way they operate. Just as an ultra-marathoner evades risk by sticking to an established routine during a race, a participating mutual company doesn’t take risk with its policyholder’s money. This is because of a fundamental difference that exists in the way a stock company operates vs. a participating mutual company or mutuality.

(Check in on February 20th, 2014 for Life Insurance Dividends and Ultra Strategy: Part Two.)

Sean Fleming

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