Think Bigger

LESSON 36Consider Life Insurance

As Benjamin Franklin famously warned, “In this world nothing can be certain but death and taxes.” Yet most successful entrepreneurs fail to prepare for these certainties until they are well into middle age and often only after they have sold their businesses for tens of millions of dollars. Perhaps the natural optimism that most really successful entrepreneurs have (which fuels their ability to take risks building a business) blinds them to their own mortality.

I realize that many readers, particularly young ones, are asking why they need to consider life insurance or estate planning when they don’t yet have a family or an estate. But preparing early can make the difference between preserving a company after an unexpected death or losing it—and it can save literally millions of dollars for your family and the causes you care about.

Let’s start with life insurance, a simple enough idea and often what ends up paying the estate taxes when an entrepreneur’s journey comes to its final end. Many books have been written about the pros and cons of the seemingly limitless varieties of life insurance. Here’s how I look at it: Assuming you’re healthy, the younger you are when you acquire life insurance coverage, the cheaper it will be. And although life insurance can be merely a reasonable investment if you live out your full life expectancy, if you die prematurely, your investment can produce a dramatically higher return and may save you from having to ...