Why Life is Insurance Important
Welcome to the next lesson. This lesson is about getting a life insurance policy so that your family is taken care of after you leave Earth. This is the easiest lesson of this course! Some people feel like life insurance is taboo, but I think it’s just their excuse for why they haven’t done something so easy and yet so necessary. Here’s a secret I haven’t shared yet: we’re all going to die some day! So handle business here on earth today while you still have the chance. Remember the year 2020? Yeah, anyone can die at any time.
You need a life insurance policy specifically to continue financially supporting the people that count on you, once you are no longer here for them. If you earn money and don’t spend 100% of it on yourself you need a life insurance policy. If you have a good guess who would take the responsibility of burying you, if you died today, then you need a life insurance policy! No excuses. If you have no family and friends you’d consider family and you’d have no clue who’d bury you if you died today then you have an argument for why you don’t need life insurance. Thankfully this is not the case for 99% of us.
A lot of people don't take care of business and once they pass away their family is left with their bills. Sometimes it's debt of the deceased, sometimes it's simply the cost of burial and yes you should feel responsible to pay for your own burial! Sometimes it’s expenses from other things.
More importantly though, there are people that we support financially like a significant other, parents, children, grandchildren, nieces and nephews, even siblings in some cases. If we died, they would be left with less money, or no money to support them. Nobody wants to give their loved ones a more difficult life. We obviously want the people we love to be able to continue living their current lifestyle or better if we were no longer here to support them.
For this reason, I always tell people that life insurance from your job is not meant to provide for your family after you die. It is meant to take care of your expenses related to you dying like the cost of your funeral, casket, and other immediate expenses. The average total cost of dying is between $18k and $41k. This includes funeral arrangements and other end of life expenses. You may have enough to pay off a credit card or something but if you have an auto loan, a mortgage, student loans or other responsibilities who is going to take care of that?Who ever knew dying would be so expensive you ask? The people who've had to take care of death related expenses for a family member without a life insurance policy, that's who. And again your family still needs to eat the very next day after you die and every day going forward. Your job is probably not going to continue sending your check to ensure your family are supported.
Consider this, if you die, would your spouse have enough money to pay bills without your support? And if so for how long? Would someone save up for college for your kids? Would they be able to enjoy the luxuries they enjoy today? Would your kids still have a nice Christmas every year? And most importantly, would you be putting these financial burdens on a family member who would feel responsible to pick up where you left off in addition to their own responsibilities?
Now ask yourself this: is taking care of these concerns worth $25-$35 per month?
Getting a Life Insurance Policy
Life insurance is much cheaper than many people think. My wife and I each have a policy that we pay about $20/month each for which will pay a beneficiary half a million dollars if I were to die. For perspective, we got these at the age of 27 & 28 on a 30 year policy. By the way, this info wouldn't be valuable to any of you readers so don't get any ideas.
Getting a life insurance policy is also much easier than most expect. The younger you are and the healthier you are the easier. If you are getting up in age, it still is not difficult and is still extremely beneficial to get a life insurance policy. The only time it's not easy and very inexpensive to get a policy is when you have a known health issue which can be proven from a physical. Even in this case, you should still research what is available for you. If you are under 25 you may not even be required to take a physical to get life insurance.
There are many types of life insurance, but they all fall in two categories: Term Life Insurance and Permanent Life Insurance (like Whole Life Insurance). The fundamental difference between the two is the concept expiration (the policy, not the policyholder).
Term life insurance means you are insured for a specific amount of years and then afterwards, it expires. It has a standard monthly premium and a specific benefit amount if you die. When your policy expires you appreciate the fact that you’re still alive and then you apply for a new policy. This type of life insurance is generally great for most people with regular lives. This is also the more economical option of the two types. Healthy individuals can easily get insured for hundreds of thousands up to millions.
Permanent insurance does not expire, you keep it as long as you’re alive and paying premiums. This insurance type is not as commonly used and mostly because of its cost. The premiums for permanent insurance are always going to be more expensive than term life insurance policy premiums. There are other benefits that come with whole life insurance like, you can withdraw money paid into your policy or even borrow against the policy. This gets more complicated, but for most people this insurance type isn’t necessary. Definitely research this and contact your personal financial advisor before going into one of these policies.
The easiest way to open a life insurance policy, is to contact the company you already have insurance through. This is generally the most cost effective route as well. If you have car insurance or homeowners/renters insurance already, contact the company that holds those policies and tell them you'd like to add a life insurance policy you can literally get this done in 24 hour. If you, like me, have insurance through the same place you bank, you can probably sign into your banking dashboard and apply for a policy there. If this is the case, you can literally do this as soon as this lesson is over and it should take less than 15 minutes.
In many cases your application will require you to take a physical so they can make sure you are as healthy as you say. If you call your insurance provider, the person you speak with will set up the physical at that time. You may be given a location to go or someone may even come to your home or work for the physical.
After this is set up, all that is left is making your monthly premium payments. And as long as you make your payments your beneficiaries will be taken care of if you are to meet your demise. Research the two categories of life insurance. Get this done today if possible (if not do it tomorrow) and check this off your check list! It shouldn’t take much time to make a decision because almost all insurance companies are going to offer you about the same insurance policy and the premium price will generally be about the same with a small variance. Most of the time the cheapest price you can get is going to be with the company you already have policies with because they give you discounts for combining the policies.
PRO TIP: If you have people in your life that you feel you would be fully or partially responsible for taking care of their end-of-life expenses, make sure you go through this lesson with them and make sure that they have insurance as well so that you are protected not only if you die but you also be covered if they die.