Wednesday, October 24, 2018
11 Excuses to Not Get Life Insurance, and Why They Are BS
I am of the belief that everyone should have life insurance. There are many reasons to have it. It eliminates debts, provides income protection, helps settle estates, diversifies investment portfolios, satisfies retirement and educational goals, along with many other needs. I help a lot of people obtain insurance, but I still meet people who think it’s useless. Some people will never be convinced. Sadly, some of these people I meet have kids, which troubles me greatly. I am not in the business of trying to convince people to do the right thing. I am in the business of providing information and letting people make their own choice. If you think life insurance is bogus, take 10 minutes of your life and check out my post. Today I give you 11 Excuses to Not Get Life Insurance, And Why They Are BS. Let’s get started.
1) I am healthy, so why do I need it?
It’s this sort of backward logic that makes my job fun. Shall we wait until we are not healthy, and it is extremely expensive to get? Do healthy people never die? Even more troubling is this fact. The healthier you are the better, but it is also more traumatic when you pass on. When a healthy person dies it is almost always unexpected. This leaves no time for preparation, no time to grieve, no time to even consider what life will be like without them emotionally or financially. When you are healthy is precisely the best time to get insurance.
2) I am young, why would I need life insurance?
Back to point one for this one. Young people die all the time, literally all the time. I have lost dozens of people around my age over my lifetime and I’m 34. Beyond the fact that death is possible for young people, it is also usually a far greater burden when a young person dies. You have little to no assets and often have debts that are tied to other people, like your parents. Do you think your parents should pay for your student line of credit? Furthermore, it is extremely cheap for a young person to get life insurance, literally pennies a day.
3) My work has life insurance
Do they? Do they really? When is the last time you looked at your employee benefits manual? Almost everyone I have met has never even looked at it once. It’s full of insurance jargon and terms that most people don’t understand. Employee life insurance covers you as a multiple of your base salary, usually one to three times. For example, if you make 50K annually and you have two times your salary in life insurance, you have 100K in coverage. Simple right? Here is where it gets tricky. Additional coverage may cost you and sometimes it is even more pricey than personal coverage. Also, if you leave that job, your coverage doesn’t go with you. Also, you are at the whim of collective bargaining, meaning if your employer does not want to provide benefits you are toast. I have seen very few workplace benefit packages that provide the worker with the proper insurance.
4) My bank covers me
Ahh, the bank. They got your back eh? Nope, they definitely do not. The bank offers what is called “Creditor Insurance.” This form of insurance eliminates loans or debts that the bank holds with you. So why do they offer this? They offer this so that if you die, they aren’t left holding the bag for your debts, like a mortgage or line of credit. You live, they get paid. You die, they get paid. The scary part is that it might not even pay out. Post-Claim Underwriting means they investigate your application once the claim is made. You better believe they will try and find an excuse not to pay out. Even worse, what if your beneficiary wants to do something other than pay off the mortgage if you die? If you can comfortably afford mortgage payments, wouldn’t you rather have the option to do what you want with the money? Not to mention the fact that your premiums stay the same as the debts get paid down and are often higher than personal insurance. I could go on for days, but I will leave it at that.
5) I am a single person
Me too! Cool! Sadly, single people die too. Sadly, single people leave behind financial burdens on others too. Not sadly, single people meet other people and become non-single. Those non-single people almost always need life insurance. For a single person, their best bet is to find the right amount of insurance to cover final expenses and look towards the future for legacy aspirations. Also, permanent insurance could be a good method of investment portfolio diversification. Aggressive equity investments plus conservative insurance coverage, a well-balanced approach.
6) I have investments
Impressive indeed. Being self-insured is a good thing. At this point in life, you are usually near retirement age and have built up enough wealth that you don’t need insurance to cover off debts or income replacement. While you might not need it, you will probably want it and here’s why. Life insurance is one of the only investments you have that will flow to your beneficiaries tax-free. That impressive portfolio you built up will take a huge tax hit when you die. That $1 you leave to your family will be chopped by 25% or even 50%. The insurance dollar will go completely intact and even better is that the insurance dollar does not cost you a dollar. You give them 50 cents, they give your beneficiaries a dollar. When people tell me, “rich people don’t buy life insurance,” I laugh. Rich people buy the MOST life insurance because they know it is the best way to leave money to the next generation and keep it out of the hands of the government.
7) I don’t want anyone getting rich off my death
Fair enough. That’s a pretty weird way of looking at it, but I will play along. Life insurance is never used to make people wealthy. Wealth is used to make people wealthy. I have wealth, I give you wealth, you are now wealthy too. Life insurance protects wealth or covers a need, that’s all. Widow’s don’t get rich when their husband dies. Widow’s keep the family home if their husband has life insurance when he dies. That widow owned “half” of everything anyway. Now that you are gone, everything is on her, including the full amount of debt. I think this argument all comes down to the perception of self-worth. If I could put a dollar amount on my worth, I would argue 10 million dollars. You might say, “That’s pretty ridicules, how are you worth that much.” I wish that was in my bank account, but over my lifetime I believe I will provide that amount of value. I believe I have that much potential. Society has taught us to devalue ourselves. I am here to tell you that you are worth far more than you might think. Stew on that.
8) It’s too expensive
I provided a good friend of mine 500K of life insurance coverage last week and it will cost her $14.75 a month. I bought a turkey sandwich last week and it cost $13.99 plus tax. It was pretty dry, but the fries were crispy and delicious. I wish it had some sort of aioli or something like that. Life insurance is historically cheap. I am re-submitting policies for people that bought them 10 years ago and even though they are older, the premium is cheaper. Why is that? The mortality tables have changed. People are living longer and therefore the cost to insure people is lower. Right now, is actually the best time to buy it and if you think it is too expensive, you haven’t been shown the proper insurance.
9) I don’t have any money
That’s a valid point. You can’t get blood from a stone. May I suggest that if times are tight now, if you died it would be catastrophic. If you can barely get by now, how would your loved ones get by if you weren’t around? May I also suggest that if a small life insurance premium is what breaks your budget, that you do not have your money prioritized properly. If I asked you if you wanted beer or financial freedom, you’d chose the latter. If I asked you if you wanted a steak dinner or your children to go to college, you’d choose the latter. If I asked you if you wanted a family vacation or your family to have a roof over their head, you’d choose the latter. Do we not have any money?
10) I am not healthy
Neither am I, awesome! The first life insurance application I wrote was on myself and it was declined. Welcome to the industry Joe! I was able to find coverage through a carrier that covers people like myself. People who traditional life insurance carriers won’t touch. It was a little more expensive, but it does the trick. Anyone can get coverage, anyone. The question is not if you can get it. The question is how much you can get, how much will it cost, and what are the terms. Life insurance is a contract between you and the insurance company and they will always try to give you coverage, it’s how they make money, lots of money. They may only provide you with a certain amount because they feel the risk is too high. Despite this, anyone can get coverage.
11) If I live, I get nothing out of it
I end my post on this one because it is so beyond laughable, yet I hear it all the time. Think about that statement, “If I live, I get nothing out of it.” Well yes, nothing except you lived, which is good right? You don’t get car insurance because you plan on getting in an accident. You don’t get home insurance because you plan on burning your house down. You don’t get life insurance because you plan on dying. You cover yourself IN CASE something happens. Also, the insurance company doesn’t want you to die. Do you think they want to pay out your policy? Let’s be real here, insurance companies don’t get rich paying out claims. They want you to live as much as you want to live. The need for insurance remains whether you live or die. It’s simple math. The need must be covered and if not, people suffer. That’s what you get out of it. Here’s the kicker, there is insurance that pays you back if you live as well. There is a product for everyone, trust me.
I truly believe life insurance is for everyone, but it must be the right fit. It must cover the need and work with your budget. During my time in the industry, I have seen all kinds of horror stories about people with no coverage or not enough of it. I have also seen what happens when people are prepared. Both are devastating, only one is financially so.
“Life insurance became popular only when insurance companies stopped emphasizing it as a good investment and sold it instead as a symbolic commitment by fathers to the future well-being of their families.” – James Surowiecki
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