Life insurance is a topic that has danced in and out of my life over the years. Money360 has even written a guide on life insurance. But here are three little tales about the times when life insurance has impacted my life and what valuable lessons I’ve taken away from those experiences.
A Childhood of Ill Health
I don’t know how often I’ve mentioned this on here, but I spent much of my childhood in and out of hospitals. I had a long list of pretty severe surgeries attempting to correct eye problems, ear problems, a hernia, and several other medical issues.
My parents were largely unprepared for this. They had pretty good health insurance, so the medical costs didn’t bury them, but they had previously raised two very healthy sons. Having a relatively unhealthy child was an experience they didn’t know how to handle.
After a recurring medical scare involving a head tumor, my parents began to really worry about the costs if I were to pass away suddenly. I was undergoing a lot of medical procedures, and although you never want to think of a child of your own passing away, I know it was at the forefront of my parents’ mind.
After asking around, they did eventually find someone who would place a universal life policy on me, though it came with a hefty premium. It was an overpriced policy and it was one that was probably far from the ideal choice, but they needed some protection in the event of something unthinkable happening.
As I reflect back on all of this as an adult, two things come to mind:
First, if you have a dependent and you’re unsure how you would be able to afford things if they were to suddenly pass away, you need some form of life insurance. I would be the last person to specifically recommend a policy, but I do know the kind of precarious financial position many people find themselves in (and I know what kind of position my parents were in at the time) and an unexpected passing can be financially devastating. Don’t let it happen to you.
Naturally, if you can afford those expenses out of pocket for a dependent and you’re sure that the future finances of your household would be secure without that person, then life insurance isn’t a requirement.
Second, get your children insured early if you’re going to do it. If you can’t afford the expenses that would be incurred if the unthinkable would happen, each day that passes is a risk. It’s a risk not only of that kind of event happening, but it’s also a risk of a medical condition appearing that could make it difficult to insure them. It nearly happened to me.
an unexpected passing can be financially devastating. Don’t let it happen to you
A Dodgy Salesman
When Sarah and I had children, we began to realize how important it was for us to have life insurance, so we started shopping around for policies. We looked online for various quotes and we also met with agents.
One agent we met with was recommended to us by a friend. At first, he seemed to be paying attention to our concerns. We only wanted term policies for ourselves (we didn’t want an investment policy of any kind, as we prefer to invest independently) and we were pretty confident as to the amounts.
After some nodding, the agent moved in for the hard sell. He pushed us hard to buy a type of policy that we had no interest in. He spent at least half an hour making a strong case for the policy.
Sarah gave the salesman the benefit of the doubt, as the agent was recommended by one of her friends. She listened to his pitch. On the other hand, I was annoyed from the start. It was clear to me he was just trying to sell us whatever package earned him a good commission – a good money-saving rule is to always expect agents to push policies that might not be the best for you.
We walked out of the office and, on our way out, I tossed the agent’s card and the documentation he gave me right in the trash can.
Two things to note here:
If you’re going to shop around for insurance, know what the insurance types are and figure out on your own what’s right for you. Know what you actually need and know what you’re looking for. Start out by defining exactly what problem you want the insurance to solve, then look for policies that solve that problem. Know the terms that might be thrown at you, and research exclusions and loopholes that might apply to you. The best way to do that is to do your research, in my opinion. Go to your library and check out a book on insurance, turn to Money360 experts, Google what’s going on in the insurance world. Don’t choose a policy without doing your homework; know what everything means and what you need.
If someone ignores what you say your needs are and tries to sell you something else, walk away. It doesn’t matter how good it sounds and how perfect the salesperson tries to make it sound. If you’ve researched the question, you know what it is you’re looking for, and if they’re trying to push you into something else, walk away. There are plenty of other policies in the sea, many of which don’t involve pushy salespeople.
If someone ignores what you say your needs are and tries to sell you something else, walk away
An Unfortunate Death
A person I respect and care for very deeply passed away not all that long ago. This person had a number of descendants, who gathered together to go through the person’s belongings. They knew he had a large life insurance policy, so they called the agent to find out more.
What they discovered was pretty shocking. The beneficiary of the policy was a person that was still living, but was actually estranged from the family. That person showed up, pocketed a pretty sizeable check, and then vanished into the woodwork.
There were other assets in the estate, of course, but the whole experience resulted in a very upsetting period for the whole family and a strong sense that the true final wishes of this person was not actually followed.
(Yes, I’m being vague here, on purpose – I have friends and family that read this site and there’s no reason for a story to be spread around.)
When I heard about all of this, my initial reaction was shock, but then it turned to concern about my own policies and the policies of those I care about.
Two key lessons here:
Stay up to date with your policies. Check them regularly – say, once a year – and make sure the beneficiaries and other options are exactly as you want them. After all, life insurance is something you won’t have a chance to make right when it’s too late.
Be involved with the estate planning of those you love the most. If you have a strong relationship with your parents or grandparents, offer to help them make sure that their estate is as they wish it to be. Make it clear that you don’t care who the beneficiaries are, just that you want to help them make sure that their wishes are taken care of. This can make a world of difference.
A Final Thought
Life insurance is something that no one wants to think about. However, it is something that we need to think about and, if we take care of it, it is actually something pretty life-affirming.
For me, it feels good to know that if something were to unexpectedly happen to me, my children would be well taken care of. Sarah would be able to handle raising them on their own without major financial worry.
Simply knowing that provides a great deal of value and relief to me now. Knowing I’ve studied the issues and have the right kind of insurance for us (in our case, term life insurance) helps, too.
It simply means one more little worry is erased thanks to being responsible and being proactive.