You may be like many people that you know and you probably want to avoid the “life insurance conversation”. You probably want to avoid thinking about death, and you probably think that you have plenty of time to build enough assets for your family to survive with or without you. The truth is that you probably do, but life insurance isn’t really meant for when the expected happens. The sad facts of life are that people die every day before their rightful time. You actually may not have enough time to save a lot of money or build a business that will take care of your family. But you do have time to prepare in case something happens to you. You need life insurance.
Life Insurance Isn’t Expensive
You may have a preconceived notion about life insurance that it’s expensive. In reality, it isn’t really. People are “expected” to live a long time today. Because of longer life expectancy, life insurance companies are actually charging less today than they used to!
Many people age 30-50 can find term life insurance for the cost of about $20/month per $100,000 of coverage. Depending upon your age and health and length of term coverage, it may even be less expensive than that.
You may be surprised. Get a quote today, and you can see just how much coverage you can get for a very affordable price. Think about what other types of insurance cost. You probably spend between $500 and $1,500 a year on car insurance. How much more valuable are your children and spouse than your car? For way less than the cost to protect your car, you can provide for your family for the rest of their lives if you pass away. Get a quote from Life Ant if you want to see for yourself. Life insurance is not an expensive investment.
Weigh the cost against the benefit. Only you can decide for yourself whether or not it’s worth it, but we encourage you to reflect on the hard reality your family will face without you and without insurance.
College Isn’t Getting Any Cheaper
This is well known, but it isn’t changing. Over the last 20 years, tuition has gone up on average 179%. It isn’t showing any signs of letting up its rate of increase. If you have kids, they will need a LOT of money for college. This doesn’t even account for other expenses your children will need in college which have also risen exponentially including, housing, food, books, car expenses, entertainment, etc. Yes, your kids can get a job, but a summer job for $12 an hour isn’t going to even begin to put a dent in these expenses. If you have money put away for college, you will need more.
Life insurance is an easy way to cover college expenses if something happens to you. If you don’t have it, imagine the struggle your kids will have in paying for school, or the student loan debt they will be saddled with if they finance the costs. It isn’t fair, but it is a stark reality. Kids need a lot of money. If you have kids and don’t have enough life insurance coverage you are opening up a big gap in their ability to cover basic expenses if you pass away.
Whole Life Insurance, While Expensive, Will Earn You Income Eventually
Life insurance can be an investment. Despite what many people will tell you, it can actually be a really good investment! Whole life insurance does pay agents a commission, there are insurance fees that cost money from the portion that you pay in, and it may not return as much as stocks do over the long term. However, there is no volatility like there is in stocks, there is very little interest rate risk like there is with bonds, and returns are typically tax-free (unless your policy is a modified endowment contract). If interest rates go up, so do the dividend rates typically. If the stock market crashes, it doesn’t directly affect the rate of return in your life insurance policy. And while you’re getting this great tax free rate of return, it is also providing insurance protection, sometimes to the tune of millions of dollars! A win for clients for sure.
The downside of whole life insurance is that the monthly payment is much higher than it is with term life insurance. You can also have surrender penalties or surrender charges to the cash value if you surrender your policy before the end of the “surrender charge period“. Typically this doesn’t last too long with life insurance policies. Annuities may have longer surrender periods with higher charges though.
Forget Leaving a Legacy, Leave Your Kids a Comfortable Life
Expenses are climbing rapidly. In many major cities, prices to rent or own have skyrocketed in the last 10 years. The average apartment rental in Manhattan is now over $3,200 a month. Food prices are up, car prices are up, and there seems to be very little relief in terms of rising incomes. If you have children, you probably want to leave them a lot of money if you want them to live a comfortable life. You can do that with life insurance.
Life insurance companies used to try to sell their whole life insurance by appealing to the urge of folks to leave a “legacy” for their kids, meaning a large sum of money oftentimes in a trust fund. Nowadays, what used to be a legacy is probably just enough to ensure that they are secure throughout their lives. Imagine what $500,000 would do (maybe buy them a house so they don’t have a mortgage payment). $500,000 may sound like a lot of money but in many markets, it’s only a small condo or “starter home”.
You Want Peace of Mind
Everyone has someone who depends on them or someone who has invested heavily in them. It may be parents, a business partner, a spouse, or even the employees of a business. You know that if they lost you, it would somehow diminish their lives. Parents may have student loans on their child, or a spouse may not have a high paying job. Whatever your reasons, wouldn’t you feel more secure if you knew that the people who count on you don’t have to worry about finances? Life insurance provides a way to at least take that worry out of the equation.
You Don’t Want to Think About Dying
If you don’t have life insurance you may have to revisit the thought of planning for a scenario where you pass away unexpectedly multiple times in your life. You probably don’t want to think too long or hard about that. If you get life insurance, you know that the people around you will have their financial situation cared for. You won’t have to put quite so much thought into dying and what will happen if you do.
Who Needs Life Insurance?
Now that we’ve covered why life insurance is important and why you should have it, let’s discuss the groups of people that could really benefit from having a life insurance policy.
Are you Under 35 and Single
If you are under 35, unmarried and you don’t have any kids, you probably don’t need life insurance. Chances are you have a small life insurance policy through your work. All you want to make sure is that if you were to die unexpectedly that your family won’t be stuck with paying expensive funeral costs or other debts like a car that they may be co-signors on. If you have a large joint debt remember that any co-signors are still responsible for covering the debt even if the primary borrower has passed away. Chances are large debts that have underlying assets that can be sold. If a house can be sold easily for more than the total due on the mortgage, for instance, you don’t need to worry as long as the asset is going to go to your consignor if you die. There is just one exception.
If you have Student Loans and A Cosigner
If you have student loans and a family member or other friend co-signed on them, remember that even if you pass away they are stuck paying them until they are paid off. If you are in this situation you probably want to have enough life insurance to cover the amount left on the loan, even if you are young and single. If you are young and single chances are that a level term policy will be inexpensive enough that you can just carry the annual payment (probably under $150 a year or about $12 a month).
If You are Married or Have Kids
If you are married and/or you have kids, you almost certainly need life insurance. If you are married without kids chances are that your spouse will struggle to keep up their lifestyle without getting additional funds from life insurance. They also will have trouble saving for retirement, and money from a life insurance policy can go a long way toward achieving this goal. Think about all the troubles with employment, rising costs, unexpected repairs and other emergency costs that your spouse may have to get through after you die. Even if you don’t have kids it’s nice and almost necessary to make sure you have peace of mind knowing that they will not struggle too much financially.
If you have kids the benefits of life insurance are pretty clear. College expenses, school expenses, food, clothes, dependence even after college all contribute to each child costing a small fortune in today’s day and age. If you have kids, whether you are married or not, you almost certainly want to be able to provide for them. Ideally, you will do it while you are alive but if you pass away life insurance is a way to make sure that they won’t struggle until they can safely support themselves.
If you are Over Age 55, Married or Not
This is a tougher area to give blanket statements regarding life insurance. So much depends on what you have accumulated in your life so far. Do you a significant amount saved up? Can your spouse support themselves in retirement? Do you have kids who are supporting themselves? Do you want to make sure you are able to leave your kids some money or enough money to pay the taxes and costs associated with inheriting other assets like a house or a vacation home?
If you are married you need to make sure that your spouse has enough money to live out their retirement even if they live to be very old (don’t assume that social security is going to get them too far), and you want to make sure that they have enough money to bury you properly without being too much of a burden financially. You should at least consider final expense life insurance, otherwise known as burial insurance if you can’t definitively say that they can easily cover all of the costs to wrap up a death. If you are still at an age and health that you can buy a larger policy, and you think that it may provide some benefit to your spouse or children, you may want to consider it. You can look at quotes with us to see if life insurance is feasible or you can contact a local agent.
If you are Middle-Aged and Single
If you are about ages 30-50, and you don’t have a spouse or children, you probably don’t have any pressing need for life insurance unless you have debts with consignors that need to be paid for after you pass away. One thing to consider is that if you were to have something really negative happen to your health, for instance, a heart attack or cancer, even if you overcome it you will have a very hard time buying any life insurance in the future. If you think that there is a chance that you may one day have a spouse and or kids, you may want to get a starter life insurance policy just to maintain what is known as your insurability. Even a small policy can be purchased with a special rider called a guaranteed insurability rider (GIR in life insurance lingo) which allows you to buy additional life insurance with no underwriting at specified points in the future. You can also buy a level term policy that has an option to convert to a whole life insurance policy in the future which you can exercise if you have a need for long term coverage.
Guaranteeing Your Insurability Is a Real Thing
You may be as healthy as a horse. You might eat right, exercise, or you may not have a family or anyone who depends on you financially. Or maybe you’re just not worried about life insurance right now. The problem is, health issues aren’t usually expected. Things like weight gain, heart disease, high blood pressure, aging, diabetes, or other issues can creep up on you, and things like a heart attack or cancer can strike suddenly. Either way, by the time you are actually worried about your health it may be too late.
If you get life insurance when you are young and healthy, it will significantly reduce the cost for the rest of your life, and in addition, it will ensure that you can be insured. If your health condition is bad enough, or if you have had a terrible disease you may not even be able to get life insurance anymore. Life insurance companies don’t want to insure people who are about to die, otherwise, they won’t make any money. They need to insure healthy people in general, where only a small percentage of their clients die unexpectedly every year.
Once you have life insurance, the life insurance company can’t revoke your insurance as long as you make your premium payments and didn’t commit fraud on the application. No one plans to die or be unhealthy, but it happens, it’s part of being human. Life insurance can’t stop you from dying but it can protect your loved ones from financial adversity.