Saturday, July 18, 2020

Do I Need Life Insurance? 4 Reasons You Do

When speaking to prospective clients I hear the same set of objections. Most fall into the group of "I can't afford it" or "the price is too high". As an insurance agent who got into the business in 1985 I've heard this more than I should. And the most aggravating part about it is after they tell me they "can't afford it" I see pictures on social media of the family at Disneyworld or a vacation in the islands. 

Of course they can afford it, but they just don't see the value of life insurance. That is where I have not done my job right. I have to do better at convincing the prospect that if the bread earner dies suddenly, there are no more family vacations. 

Another objection I get, especially from younger people, is "I don't need life insurance". These people are falsely under the impression that they won't die, or at least not very soon. Odds are they won't, but accidents happen all the time. 

And these same people, mostly single and unattached, feel that they don't need life insurance because they don't have families of their own. When I ask, "Are you planning on getting married and/or having kids some day?" the answer is yes. If you can start a plan while you are younger and it costs less than waiting five years, why not go for it? 

Life insurance premiums are based on a variety of factors, including your age, your health status, if you use tobacco or not, etc. Men have higher rates than women because statistically, they die sooner. (Speaking on behalf of men, we tend to not go to the doctor as much and we are more prone to do dumb stuff like stand a ladder on the back of another ladder, etc.) But putting off the purchase of life insurance will end up costing more in the long run.

Forgoing life insurance purchases at a young age can be costly. As an example, the average cost of a 20-year level term policy with a $250,000 face amount is about $214 per year for a healthy 30-year-old male. In contrast, the annual premium for a 40-year-old male is about $486. The overall cost of delaying the purchase for 10 years is $2,720 over the life of the policy, according to Policygenius "Life Insurance Statistics in 2020"

But the real question is do you need life insurance? More than likely the answer is "of course you do". Whether or not you have a family of your own, there are still reasons why you should look into some coverage that fits into your budget. Here are a few:
  1. Funerals aren't cheap. You can save money by pre-planning, but that includes pre-paying. The average funeral costs is between $7000 and $9000. My father, whom I have mentioned in previous posts, pre-planned but didn't put any money down. Between the time he picked out his casket and other accouterments and the time he passed away, the prices of the item went up a bit, forcing my sister and I to pony up around $13,000. 
  2. There are costs associated with dying. When I mention this to a client they look at me like I am speaking a foreign language. For the majority of us who will die, we may be sick or in the hospital for a few days prior. And you can linger in the a medical facility after an accident. Yes, there are exceptions, but death is not always quick or cheap.
  3. You may have debt. Being young doesn't mean you don't (or won't) have debt. Student loans, credit cards, and car payments may not be forgiven if you die. And older people have plenty of debts, like mortgages. Paying off the house means your family can still live there, instead of having to move to another home or town or school district.
  4. Replacing your income. I like to share the story of the couple who had no kids but loved to go on cruises and buy cars. When I spoke to the husband about life insurance and the loss of income if he was to die too soon, he said his wife could "cut back on that stuff". But when I mentioned everyday expenses like car repairs or having to get a new refrigerator suddenly he said, "She can find a new husband. She's hot." (Sidenote: She didn't like this plan and insisted he purchase a policy)
Given that we are in the midst of a pandemic, I highly suggest giving us a call and finding out what we can do that fits into your budget. If you want, you can schedule your own appointment. And as always, stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast.

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