08/21/2020
Life Insurance
For the past 3 years as an insurance agent, my focus has been home, auto, and farm insurance. That's not going to change, I'm passionate about it, I feel like I can make a difference, and I really enjoy helping people.
However, I have not done a very good job with life insurance. I don't like the picture you have to paint to sell life insurance, it's a difficult subject. No one really likes to talk about their own death, and I don't really like asking people about it either.
Just because it's a difficult conversation to have, doesn't mean it's not my job to have it. I believe I have a responsibility to make sure we have that conversation, and that's going to start with this post. I'm going to be direct, it is required when talking about something so important, my intention is not to offend, though some things I say might sting a little, it's going to be fairly long so bear with me because it's important.
"Why do you need life insurance?"
~ So your wife, husband, or child doesn't have to start a GoFundMe to pay for a funeral, or your next mortgage payment. I've specifically told my wife that if something happens to me, I don't want anyone starting a fundraising campaign for her and the girls, because I don't want anyone thinking I didn't take care of them. I might be dead, but my preparations and life insurance policy will replace my income for the next 15 years, it's going to pay for a vehicle for each of my girls when they reach 16, it's going to pay for college if they choose to go, and it's going to pay for each of their weddings at whatever point that happens. I may not be there physically, but they will know that I did everything that I could and had the forethought to financially to take care of them while I was alive.
"How much life insurance do you need?"
~ In general, I suggest adding all of your existing debt together, mortgage, vehicles, school loans, everything, then take your current annual income, and multiply by the number of years your dependents will live off of it, 5, 10, 15, or 20 years whichever best fits you. Then, estimate future education costs. That's a good basis to start, if you then want to add in other expenses for things like weddings, vehicles, maybe a graduation trip to Hawaii, whatever you want to include, it's your policy, you decide.
~ Remember, in the tragic event that this policy pays out, your spouse and/or children will be going through the worst moment of their lives. Think about your current financial status, do both you and your spouse work? Does your spouse need your income combined with theirs to make all monthly payments? Does your income alone pay for all monthly payments? Now, remove your monthly income from the situation completely, would your spouse be able to keep your kids in the same home, make the car payment, etc?
~ Multiple life insurance policies is not a bad thing. You aren't required to have the total amount you need with one single policy. Maybe you can get a $200,000 policy now, and 5 years from now you are a little more financially stable and can afford another $40/month, and get a $750,000 policy at that time. Do that, get what you can afford now, even if it's not the $1,500,000 policy that you want, believe me, having a $200,000 policy now is better than waiting and something terrible happening.
~ Imagine after your death, in your will your family discovers that you have $10,000 earmarked for a graduation trip to wherever in the world they want to go. You may have been gone for 5 years, but I want to think that my kids would smile thinking about their old man while on that vacation.
"Who needs life insurance?"
~ In my opinion, everyone, with very few exceptions. For example, life insurance is income replacement. So in theory, a child wouldn't need life insurance because they don't have income to replace, but I would suggest adding a child rider onto your life insurance policy. A child rider is done by units, each unit represents $1,000. Adding a child rider with 10 units would be $10,000 individually for all of your children. Depending on the carrier, generally these will be in force until the child reaches 20-22 years age. This is tough, but it's essentially a death benefit. If a child were to die, this would cover final expenses. A morbid thought, and one I hope no one has to experience, but necessary.
"How much does it cost?"
~ I'm mostly talking about term life insurance in this post, and I'll give some examples of premium for a 20 year term. These are just generic quotes that I ran for a fairly healthy height/weight profile.
24 year old male with $1,000,000 in coverage - $32/month
35 year old female with $1,000,000 in coverage - $35/month
37 year old male with $1,000,000 in coverage - $42/month
46 year old female with $1,000,000 in coverage - $71/month
55 year old male with $500,000 in coverage - $135/month
~ When we talk about premiums in the 1M range, a health checkup will be required, blood sample, blood pressure, weight, height, all of these things are taken into consideration for premium and nothing is final until those results come back.
"I already have a life insurance policy through my employer."
~ This is something I see quite a bit, and it's great. A lot of time group benefits through your employer will allow you to get life insurance incredibly cheap. Usually, the number is capped, sometimes its 7 times your annual salary for example, or maybe it's just a number, and the maximum amount you can get is $250,000, or even $500,000. Always max out whatever you can get, if you haven't already, the next time they do enrollment, ask if you can max it out. But, and this is important, do not rely only on that policy. Life happens, change happens, jobs change. Don't be complacent and think, "well I have life insurance and if I quit or get fired, I'll just get a different policy then." First, if you do change jobs, finding a new life insurance plan is not at the top of your to-do list. Secondly, premium goes up the older you get. If your 35, and you have $500,000 through your employer and you change jobs at 42, the premium at that point will be higher than if you took out a policy at 35. Or, what if you change jobs and try to get life insurance at that point and they discover you have cancer, or renal failure, anything that could potentially prevent you from getting a policy? Life insurance through your employer is a great thing to have, but please supplement that with your own individual policy.
"How difficult is it to get a quote?"
~ Super easy. Literally the only information needed to get a quote is name, date of birth, height, weight, and to***co use (yes or no,) that's it. Now, in the event you decide to move forward with a quote, there will be questions related to health history, family health history, current medications, things like that, also if somehow your weight is 40 pounds higher than what it was when we quoted, the premium might go up a little.
I believe life insurance is incredibly important. Please talk with your spouse, find out what number would give you the peace of mind and the satisfaction of taking care of your family, and get a quote, you might be surprised how affordable it actually is.
