I have been taking notes over the last little while regarding the feelings people have towards life insurance and I am here to (hopefully) educated and overcome some of these old stigmas and false beliefs.
Putting a plan in place have several steps and the first one is to cover off your risks so that you don't fall flat on your ass in the face of emergency or devastation.
#1 "It won't happen to me" really isn't a plan, it's a hope. Death and illness don't discriminate.
#2 "My parents didn't have insurance" they got lucky, did you know anyone who's parents passed away and had or didn't have insurance? What kind of a difference did it make?
#3 "Insurance is a scam" I don't hear this one often but I think there are lots of people out there who think it, or wonder when they hear someone else (like their parents) say this. Insurance is something you pay for IN CASE sh*t happens, and once you make that claim you will quickly realize how much of a scam it isn't. I think we feel this way about most types of insurance - WHY are we paying for something that MIGHT happen? Well once your basement floods and ruins all the things you worked hard for, or you get rear-ended by some dude texting about a booty call...you will be thankful you had it in place.
#4 "It's expensive and I can't afford it" - some types of insurance are more expensive than others and they are all important and useful for different reasons. Find what works for you, and how much your budget will allow. Something is always better than nothing and chances are if you see the importance you can find room for it in your budget. I have seen people quit smoking, reduce their booze consumption, take a look at where their money is going to find room. You are champions!
#5 "I have too much insurance, insurance for everything" well, yes you do probably but why would you insure your car over your life? Why do we insure our stuff over our own lives? Do we value our possessions more than we do our own energy force that allows us to get up and go to work and make money to pay for all those things, vacations, food? It's backwards really.
Thinking that we'll be ok if we were unable to work and therefore losing our income - what sustains our costs of living (basic needs at the very least) - is not only a common misconception it's unrealistic - to put it nicely. Insurance is really a privilege rather than an entitlement. Most people who want it can't get it because they have been sick, and most people who don't want it could easily get it because they are healthy and this gives them a false sense of security "I'm healthy what do I need insurance for?"
Some reasons you need insurance are listed here:
- Income replacement for your survivors - children, spouse or anyone who relies on your income to live their life. And for how many years would they need it? How old is your youngest child?
- Time take off work when we lose a loved one, how long would you need to be off?
- Debt repayment - mortgage, vehicles, student loans, line of credit, tax debt
- Final Expenses - nowadays run you about 10,000 and no matter who you are someone is going to be having a nice celebration of life for you and that responsibility will fall on their shoulders.
- Savings - anything you would have saved for over the course of your life that affects your family, education savings for the kids, retirement for surviving spouse
It's hard to think about all of this now - uncomfortable to say the least, but planning ahead saves a lot of despair. Believe me, I see it all the time.
Do you really want the people you love the most to move into your parents basement all the way back home (a major uprooting). Do you think your spouse is rushing back to work? For parents who stay at home, you are a major contributing factor to your families as much if not more than the parents who work. Money should always be the LAST thing on your mind in a crisis, you want to focus on healing, accepting and family time, not how the hell you will buy groceries and fill the car with gas.
For those of you who have insurance, understand it and feel good about it - I would love for you to write to me why you have it and why you feel good about that decision, if it's something that was hard to work into your budget or not. If you feel comfortable, post it under my blog on facebook and share your experience with others. You can make a difference.
If you have been to the bank or with another advisor and you are unhappy let's talk, education is important and even when you have had a bad experience there's always someone who can repair it for you - I sincerely care and I'd love to be that person!
