Dying without Life Insurance.
For many people, “life insurance” sounds like something, only the rich and famous get for their heirs, or is only something someone needs to worry about when they get “old.” But that’s the same kind of thinking that makes a roofer super busy once it starts raining!
The same kind of thinking leaves many family members in a “bind” when one of their loved ones dies without owning any life insurance in place. And let’s be clear, we’re not just talking about those who die without life insurance who have dependent spouses and children that need to be taken care of, we’re also talking about those who either are aware of or haven’t really considered how much money it would take to pay for a proper burial.
This is why…
We wanted to take a moment and discuss some of the most common questions we get from folks worried about what might happen if they or a loved one of theirs were to pass away without a life insurance policy suddenly.
Topics that will be addressed in this article will include:
- Why just about everyone needs some “type” of life insurance.
- How much does it cost to raise a dependent child nowadays?
- How much does an average burial cost?
- Can someone purchase a life insurance policy on someone else?
- What can I do to help ensure I find the “best” life insurance policy for me?
So, without further ado, let’s dive right in.
Why just about everyone needs some “type” of life insurance policy.
Now chances are, if you’re reading this article, you already know that it’s probably a pretty good idea that you need to purchase a life insurance policy for yourself or someone you love. But it’s also probably true that you’ve either been told by someone or the person you want to get life insurance for that they either don’t need to purchase life insurance because:
- They don’t have or want to leave any money to their heirs or family.
- They’re too young and healthy, and it’s just a waste of money to buy a life insurance policy now.
Or that they don’t care what happens to them after they are dead, it’s not something that they need to worry about.
In cases like these…
The common thread that they all have is that the proposed insured doesn’t feel a need or see a reason why they may need or what to purchase a life insurance policy now. Which is fine, if the proposed insured is wealthy and able to “self-insure” his loved ones and doesn’t need to worry about any of the potential costs associated with:
- Raising any of their children,
- Protecting a dependent spouse,
- Or just paying for one’s final expenses and/or burial costs.
The potential insured isn’t independently wealthy or doesn’t have the savings in place to protect their loved ones and/or pay for their own burial; chances are they do need to purchase some type of life insurance policy; they just need to see and understand why.
Which brings us…
To our next couple of topics, which will hopefully shed some light on why, for some, dying prematurely can significantly impact the financial future for years if not decades to come!
How much does it cost to raise a dependent child nowadays?
One of the most common reasons people choose to purchase a life insurance policy on themselves is to protect their dependents. Most commonly, their dependent children. For the purpose of this discussion, we’ll define “dependent children” as one under the age of 18.
And in the United States…
This means that you have a HUGE financial burden on your hands. You see, according to a recent article in USA Today, the average cost of raising a child in the United States is set at $233,610. This covers costs from birth to the age of 17, which means it’s roughly $13,700 a year to raise a child. That means, if you want to cover college costs or at least part of them, you can tack on anywhere from another $30,000-200,000.
Can your spouse cover these costs alone, should you die?
If you are a single parent, who will take on the responsibility of covering these costs for your child?
These are the types of questions one should ask him or herself when considering whether or not they should purchase a life insurance policy on themselves or a loved one, because if this person were to die “prematurely” these WILL be the questions you will be FORCED to answer for real!
If you are considering getting a life insurance policy solely for the purpose of taking care of your child or children until the age of 17, then it’s pretty easy to do the math to find a reasonable life insurance policy to make sure they are well cared for.
If you have a 10-year-old child, that means you need a life insurance policy of roughly $100,000 to see your child through high school comfortably. If you have a 5-year-old child and a two-year-old child, you might want to consider a life insurance policy of around $400,000 to help them through high school.
You let these numbers scare you; let’s just consider this. Let’s assume that you are in your early thirties, and you’re earning about $40,000 a year. You might not think you need a whole lot of life insurance. But let’s now imagine that tomorrow you are involved in an automobile accident you die instantly.
That $40,000 dollars that your family was receiving from you each and every year suddenly disappears.
“This is BAD”
But when you think about the fact that you were probably going to work for another 30 years or so, and were likely to earn more money each and every year, this sudden loss of $40,000 dollars extrapolated over 30 years represents at a loss over 1.2 million dollars at a minimum!
This is why dying without a life insurance policy can be so financially devastating to a family!
How much does an average burial cost?
Let’s now tackle the argument made by many who say that they don’t need any life insurance because they don’t have anyone financially dependent upon them.
Which is a valid argument…
Provided that they understand that there are REAL costs associated with dying and that they have either prepared to have those costs taken care of when they pass or have enough in savings to make sure their loved ones won’t be burdened with them either.
If this is the case…
Then chances are, the proposed insured might not need to purchase a life insurance policy for themselves however if they don’t, a good life insurance policy can help you cover these costs entirely or at least partially so that your (or their) death doesn’t become an expense for anyone else.
It’s important to understand that an average funeral costs roughly $9,000 if you are buried and about $3000 if you are cremated. That is a huge expense to throw on your family if you die.
Do you really want them to be responsible for covering the cost? If you don’t, then getting life insurance is a great idea.
We should also not that…
People without life insurance may also leave behind a whole host of final expense costs as well. These are “costs” that aren’t necessarily related directly to your funeral but have to do with your death.
- Your brother’s family takes you into their home during the last few months of your life to help care for you when you are no longer able to live on your own.
- Your sister-in-law takes off two weeks from work to come and stay with your spouse during this time of grieving.
- Your parents travel from Florida to your state to attend the funeral. The travel expenses are considered final expense costs.
- You die while hiking in Utah, but you live in Pittsburgh. Transporting your body back home is a final expense cost.
All expenses that can and often be incurred by a family rarely considered before these “types” of bills or costs start rolling in.
Can someone purchase a life insurance policy on someone else?
Let’s face it; sometimes it’s just not going to matter how many times you tell someone that they need to purchase a life insurance policy for their loved ones or how well you present the argument that dying without a life insurance policy in place would be a catastrophe for everyone involved.
Some folks are just going to come to the realization that if they want to make sure that they and everyone else around them are protected, they will need to take the “bull by the horns” and purchase a life insurance policy themselves on the person that is either unwilling or incapable of doing it for themselves.
In cases like these…
A person can choose to purchase a life insurance policy on another person provided that they can demonstrate that they have both an insurable interested in the proposed insured and that they have this individual’s consent as well (see: Buying Life Insurance on Someone Else).
This process has never been simpler now that there are many no medical exam life insurance policies, and no medical questions life insurance policies, which will make the process of applying and qualify for coverage much easier than it used to be years ago.
Which brings us to the last topic that we wanted to discuss here in this article, which is…
What can I do to help ensure I find the “best” life insurance policy for me?
In this article, we discussed a lot of different topics ranging from why someone might need to purchase a life insurance policy to how someone might go about buying a life insurance policy on someone else who simply wasn’t’ interested in paying for their own life insurance policy.
Two very different topics…
However, each demonstrates very nicely how important it’s important to understand that purchasing a life insurance policy isn’t like purchasing any other “type” of product. It involves understanding the complexities of what you are hoping to achieve by purchasing your life insurance policy, combining it with understanding what “kind” of life insurance policy the proposed insured may or may not qualify for.
This is why…
The number one thing that you can do to improve your chances of being able to qualify for the “best” life insurance policy out there is first to be sure that you choose to work with an agent who fully understands what your needs are. Then make sure that he or she has a wide variety of different products offered by various insurance companies so that you aren’t forced into a…
“One Size Fit All”
Approach to your needs.
The good new is…
That here at IBUSA, we have chosen to remain an independent insurance brokerage that can work with dozens of different life insurance companies so that when it comes time to determine “which” company is going to be the “best” for you, we don’t have to rely on just one or two different options!
So, what are you waiting for? Give us a call today and experience the IBUSA difference.