The Reality of Life Insurance
I saw a post on LinkedIn the other day that talked about a family using a Go Fund Me page to pay for the funeral expenses of their husband and father. This is a sad and terrible situation, but it’s just the beginning. This family in the immediacy of grief is struggling to find the funds to honor their loved one. Down the road, how will they keep the family home? Pay for college?
Every situation is different, but there is one single answer to avoiding this: Life insurance. I ask new clients everyday, “Do you have life insurance?”. And more often than not, they so say no. They are all smart people with careers and businesses and full lives, and the reasons they give me are sensible – but not often valid.
So I thought it would be helpful to lay out some of the basics.
- Life insurance does not have to be expensive.
I recently ran a quote for a 47-year-old woman for $500,000 of 20-year term for $47.00 per month. A $1,000,000 20-year term policy on her 56-year-old husband was $296.00 per month. That's one example. But if you sign up when you’re younger? A 30-year-old man can get the same $1,000,000 20-year term policy for about $50.00 per month.
- It's not that hard to get life insurance these days.
Back in the day, to get a million dollars of life insurance, it would require answering a bunch of questions, give blood, pee in a cup, etc. Now there are a lot of companies that have what they call accelerated underwriting. The rules vary, but a lot of times we can get up to $1,000,000 of coverage just by answering some questions over the phone. No blood. No pee. No nurse coming to your house and asking questions. It doesn't get much easier than that.
- It’s the amount that’s important, not the type of insurance.
It's easy to get confused by all of the insurance industry lingo. Whole life. Term Life. Universal Life. Indexed Universal Life. Variable Life. The best kind of life insurance to have is the kind that is in force when you die. That being said, if you haven't bought ANY life insurance because you're confused by the all of the different kinds, it's easy to fix. Just buy some term insurance. If you have questions about this, just reach out to me and I'll help you.
- It's always cheaper to buy insurance today.
People will tell me; I wish I had bought life insurance when I was younger. Well, guess what? You're younger today than you will be tomorrow. Plus, most insurance companies price the insurance off of your next closest birthday. For instance, my birthday is in August, so in February of the following year, I will be my next insurance age even though I won't be a year older until August. There's a saying about the best time to plant a tree was 20 years ago. The second-best time is today. Same thing on life insurance. In general, you're not going to get any younger, skinnier or healthier in a year or two. Buy the coverage now. If you do get skinnier, or stopped smoking or your blood pressure went down, reapply for new coverage and drop the policy you have now. Don't Wait!
- What if you need $2,000,000 of coverage but you can't afford it? Buy a lower amount of coverage. Shorten up the term of the coverage from 20 years to 15 or 10 years. Perfection is the enemy of progress. It's always better to have something than nothing!
I always contend that the reason somebody buys life insurance is because they love somebody, or they owe someone money. If that sounds like you -
Go buy some life insurance. It's not that hard.
-KB