The game of Life. Life Insurance that is!

Tragedy happens. That subject may just be one of the first things I ask God about when he takes me home, why do tragic things have to happen? Children getting taken way too soon? Gut wrenching. Cancer, awful to hear in any sense. Parents dying with young kids? Makes me sick to my stomach. I know that none of these things are preventable, but I am always encouraged when I hear that someone took the proper preparations and had life insurance.

I know, I know. The very thought of life insurance salesmen can conjure up the same images in peoples’ minds as used car salesmen and TV injury lawyers. They cannot be trusted and often times make a living skirting the edges of morality. Life insurance salesmen can also get a bad wrap because they are selling something that can be based on fear. What if your husband dies tomorrow? What would you do?? How would you feed your kids? I acknowledge all of these things. I would also like to say that stereotypes are often created on some basis of fact. Therefore, there are, without question, unscrupulous life insurance agents out there. So, how do you avoid one of those and make sure that you still get what you need? Get educated!

I truly, 100% believe with all my heart, that just about everyone needs life insurance. Yes, I said NEED. If you are a millionaire, and have liquid cash laying around, you may stop reading because you are self insured through your wealth. For the rest of you, education can save untold amounts of heartache if you plan correctly for something you hope you never need.

I believe the best and only type of life insurance you should have is level TERM insurance, in the amount equivalent of 10x your income for a term length of 20-30 years. Term insurance can be very inexpensive, in fact it is the cheapest life insurance you can get. What you buy, is what you or your family would get if you passed. If you bought a 30 year term with $500,000 in coverage and you passed away in year 22, your family would receive a check for $500,000.  The reason it is so cheap is that all the money you pay in is just the amount of the premium you are paying.

Whole life and variable life policies are set up so you pay a higher monthly rate for their “savings” plans. The problems with these policies are numerous, but the biggest is that the cash value that is built up over the lifetime of these plans is only made available to you if you at some point cancel the policy.  For example, you pay a higher premium on a whole life policy, say, for 15 years. If your policy amount is $500,000 and you have a savings built up of $10,000 and you were to pass away, your family would receive $500,000 and that $10,000? It is gone. It goes into the insurance companies’ pocket. Pretty sweet deal, huh? Charge a higher premium for a policy that in the end, the customer gets the exact same benefit they would have gotten with term life and paid a lot less for a month. Impressive. Yet, life insurance agents wonder why they have a bad reputation!

I have heard numerous stories of tragedy. All of them include heartache and pain. At times though, that pain and heartache has morphed into thankfulness and gratitude. Thankfulness that planning ahead and having a policy in place, cared for the spouse and children of the deceased. Being prepared with life insurance took all the financial stress out of the grief situation. Losing a loved one will never be easy, but it can be less of a financial burden. Take the steps now to prevent that burden on someone you love. I encourage everyone to have life insurance and I hope that you never, ever have to use it.

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