September is LIFE INSURANCE awareness month. You may have seen some of the #LIAM2019 posts on social media or on a poster at the store. It’s a whole month dedicated to bringing awareness to everyone about the value life insurance is and how it works. I wrote about life insurance basics last month, so we are continuing the conversation that everyone needs to have. To catch you up, read last months article here. Also, here is another great website to learn more about life insurance from an unbiased source – https://lifehappens.org/ .
I have heard too many times about older “professionals” who ignore the wife in financial planning. The ones who never explain to her how the life insurance works. We are in a generation where women have become bread winners, juggling career and family, and winning awards for our business acumen. However, we are still under-served by the financial and insurance industry. We are not often told how valuable WE are in the family picture from a monetary standpoint . In honor of LIAM and women everywhere – here is some education about insuring your life!
So, Who Needs Life Insurance?
Who really needs life insurance anyway? That’s tough to answer in general, because we are all in different seasons of life and have different goals and dreams. But as a general rule, if you have financial responsibilities, then you may want to look into life insurance. Usually, this means if you have a family, have a mortgage, or own a business, you probably have an insurable need. However, looking at who is actually insured, women especially seem to be lacking coverage. Despite the fact that 86% of women age 40 to 44 are mothers, over 40% of all women do not have life insurance. When you compare the same with men, only about 30% of fathers go without life insurance.
Why Don’t Women Have Adequate Life Insurance?
Women may not see the need in their own lives to have life insurance. We also tend to overlook the value we bring to the table, at work and at home. We believe the myths we tell ourselves and forget to ask WHY and decide if the myths are true or not.
So, If you are thinking, “I don’t need Life Insurance,” maybe one of these life insurance myths is getting in your way:
- You think it would be too expensive.
- You don’t see the the need to be insured because you are not the primary breadwinner of the home.
- Or you simply didn’t think insurance was needed at your current life status.
I know there are many more reasons and concerns women have with insurance and how all the types work, which you can learn more about at the links we mentioned above. But these few myths probably encompass the majority of women’s hesitation to call someone for a quote.
Myth 1: Life Insurance is Too Expensive
We pay a lot for most “insurance” we are required to have through life – so it makes sense that we would assume life insurance is no different. We’ve grown accustomed to paying $100 a month for auto and home insurance. When someone thinks it may be expensive, it’s easy to want to just ignore it and hope for the best.
But really, it is usually not hard to find an insurance policy that meets your needs and stays within budget. I mentioned last month that Term insurance is very affordable – you are paying pennies on the dollar for dependable coverage. So when the budget is tight, Term is a great option. You can add more coverage later or convert to a permanent solution when your finances and responsibilities change.
The younger you are and the healthier you are the better your premium rates will be. Thanks to the information age of today we can run the numbers with several insurance carriers easily and accurately. So we can shop around and find a great rate on sufficient coverage. Women’s insurance is cheaper anyway, we live longer and tend to have less sudden deaths. Coverage for a healthy 30 year old for $300k in benefits can be around $20 a month.
I would encourage you to get a life insurance check up this month! Have an independent agent look over what you have now and what you may want to change or update. You’d be surprised by how much you can save when all the best companies are competing for your business!
Myth 2: I’m a Stay At Home Mom or Don’t Make The Money in the Family
I cannot tell you how many families I have sat down with where the husband had life insurance, but the wife did not. Usually this was because the husband was the main income earner, so they figured he was the only one that needed coverage. They did not consider the financial impact of the wife’s possible death.
Think about how much it would cost to have a operations manager for your home. It becomes apparent that stay at home moms have an actual monetary value, even if they’re not drawing a paycheck from anyone. Inn the absence of a SAHM, if you have grade school children you’re looking at $175 a week for childcare. Paying DoorDash to deliver your groceries for you once a week because you’re working full time is another $25 a week.
How much does it cost to have a house cleaner, chauffeur, tutor, etc? Who helps with the children while the other parent works full time? All that extra value needs to be considered when you look at the family’s budget and expenses. There is a huge benefit not having to pay for someone for these services. Moms – you provide an immeasurable value and don’t let anyone tell you that you don’t have a job!
Maybe you are a working partner in the relationship, but you make less than your partner. Same idea applies, would your partner be able to keep up with all the benefits and tasks you provide? Perhaps you pay part of the mortgage or other loans you both are responsible for. The thing to understand when it comes to whether you have adequate life insurance coverage assess your value fairly. The goal is to provide an amount that would ease the financial burden on your loved ones.
Myth 3: I Have No Dependents To Worry About
What if you don’t have kids or a traditional family or anyone depending on you? My advice is still get life insurance! Because it’ll never be cheaper than it is now. You get the best discount the younger you are and better health you are in when you get life insurance. Who knows what your life is going to be in 5 to 10 years, so get something in place NOW. Chances are that later you will want life insurance, but you can lock in your health and age right now. You’ll be able to get better insurance because of it. Then years down the road, you are insured and can leave a legacy for someone or an organization.
I wish I had known that personally a long time ago. Instead, when I was young and healthy and didn’t have kids, I didn’t have any responsibilities. All I had was me myself and I, so I didn’t see a need for life insurance. Then at 30 years old, I was diagnosed with Melanoma and became un-insurable for a long time. For something I never saw coming. Now, having to wait almost 10 years past my last “all clear” to be able to consider life insurance. It puts an urgency under my butt to let others know to DO IT NOW! Because I know that sometimes we wait till it’s too late.
Re-emphasizing that Growth Part from Before…
Again, one of the little known benefits of life insurance is the tax advantage asset accumulation ability. So aside from the benefit to your loved ones, there are living benefits you get to enjoy as well. We all know we don’t want to pay anymore taxes then are required, so all of us are interested in tax advantages. A lot of us have a 401(k) through work which we can contribute to, but remember that is going to be taxed in retirement.
An option that many people don’t know about is a cash value life insurance plan. Specifically Universal life insurance plans that are flexible: you can increase or decrease how much you are paying monthly. A portion of how much you pay goes into an indexed investment portfolio. That account interest is based on market and is protected against losses. These accounts can grow right alongside your 401(k) or your other investment accounts. With several buckets of funding available you have a full holistic financial strategy!
This same type of life insurance policy can be put in place for a minor as young as six months old! Imagine setting up your child’s account for them at a few years old. Not only have they already been approved and have a permanent life insurance policy, they have a nest egg already growing. We know from the Rule of 72, that growth over time just keeps doubling. At an 8% return, that money grows and doubles every 9 years. Place them on a path to understand money early! How much better the world would be if we could teach these things to our children?
Keep the Discussion Going…
I encourage you to sit down with your loved ones and have an open and honest conversation about life insurance. Discuss what your wishes are for your family. How do you want the children to be raised and brought up? Do you want college to be taken care of for them? At least figure out the basics of what you have now. I hope you know some other areas you can consider putting insurance in place.