Long Term — in an Instant
In a world of instant gratification, long-term thinking creates real wealth. Captive insurance serves both immediate protection and long-term capital accumulation.
What Is Long Term?
For some it is longer than one second. If a person must wait for that click to upload, it seems like an eternity. For others, waiting for their monthly check requires planning and even sacrifice. Still, the nine-month wait for the birth of a child is a lifetime. Sometimes it feels like the teenage years will never end. Retirement? Do people even plan for that anymore?
Certainly today, long term is much, much shorter than ever before.
The Illusion of Instant
Generally speaking, people today access and process information so fast that long-term decision-making and planning is becoming somewhat of a novelty. With one click on your phone, within one second, you can tell how any specific financial vehicle or index is performing right now. You can determine what mortgage interest rates are right now. You can tell the exchange rate in Canada, how much money is in your account, or the price of virtually any product which exists — right now.
There are many important items you cannot access right now with the click of a button. Some may dismiss anything they can't instantly receive. This lack of a long-term vision may cause some to cut corners, to focus on instant gratification, or attempt to win the lottery. These illusions create many more problems than they solve.
The Benefits of Long-Term Planning
The lack of long-term planning means many people miss out on the benefits of long-term synergies and planning. Long-term thinking has intent and substance, even sacrifice and care. History, freedom, sacrifice, patriotism, care, charity, right and wrong typically take nurturing and time in order to see their fruits.
"My parents had a strong impact on who I am today. My mother and dad both encouraged us to think about the long term — where you wanted to be — to think about education, to think about what is right and what is wrong, and to do things that will help you in the long run." — Tony Dungy
The disciplines of saving, investing, adjusting, growing, time-value of money, and compound interest are all long-term propositions. Updates, adjustments, debits, and credits may all be immediate; however, the decisions and processes should be made with long-term goals in mind.
Life Insurance: A Long-Term Example
Permanent life insurance is a great example of long-term intent. The very nature of accumulation of cash values, tax-deferred growth, and access to these values are all long-term in nature. Ultimately, life insurance is purchased today on behalf of a future date potentially twenty to forty years in the future. Most policies perform closely to their projected returns. One "bad" year shouldn't cause a surrender of a policy. Even in bad years, the principal is protected, the benefit remains intact, and over time these policies have continued to perform and provide the intended benefits.
Captive Insurance: Immediate and Long-Term
Creating your own captive insurance company serves both immediate as well as long-term needs. The company protects an operating company immediately. However, these companies should be created with a long-term thought process, as claims will vary from year to year. These companies preserve capital, accumulate surplus, and similarly to the operating company they insure, must season, adjust, and mature over time.
Certainly instant, drive-through experiences serve a valuable purpose at home, work, or play. Responsiveness is a proper expectation for people and should be met with a prompt call, text, or reply. Another instance for taking quick action is when proper research, facts, and your situation call for getting started. Reading, asking questions, and ultimately understanding financial products, strategies, and solutions require action. These actions should be taken NOW. Taking action now regarding your future is in both your long-term and immediate benefit.