Everyone knows why life insurance is important, but many of us choose to ignore the reality of what would happen if we were to die suddenly without the proper protection. The results could be devastating for your surviving family members, leaving them with a large bill for your final expenses, or even worse, loss of the family home because they can no longer cover the mortgage.
If you don’t currently have a life insurance policy, you are not alone. According to Life Insurance Statistics and Facts, which is a report put out by the life insurance industry, about 43% of the population don’t own a life insurance policy in any amount. Unfortunately, the study found that most of us are in desperate need of a life insurance policy. Nearly 1/3 of Americans would feel the loss of the primary earner in the household within the month. We gathered a few stories to highlight the importance of life insurance. While these stories are fictional, they are based on very common situations. Mary and Steve have a 24-year-old daughter named Amy who took out $150,000 in private student loans to fund her law school degree. Her parents co-signed the loans, wanting to give Amy a shot at her dream career. Amy graduated from law school, joined a great law firm, had a baby and started paying off her student loans. When she died at the age of 34 from breast cancer, her parents suddenly became responsible for about $120,000 (the balance on her loans) and their 2-year-old granddaughter. Because they co-signed the loans, Mary and Steve were responsible for repaying the loan balance. In some cases, the loan documents may include an acceleration clause that will bring the entire balance due at death. Mary and Steve could not afford to pay off the loan and had to sell their own home to settle their daughter’s debt. While no parent ever wants to take out a life insurance policy on their own child, if you have co-signed their loans, and paying off the balance of those loans would be financially devastating; a life insurance policy can protect you from financial ruin. A 30-year term life insurance policy on a 25-year-old woman (Amy’s age when she graduated from law school) would be very affordable and would have saved the day for Mary, Steve and their granddaughter. 1. Insurance Through Work Isn't Enough Scott and Trish were happily married with two kids. Scott had a great job that he loved and was pulling down $150,000 a year. His employer provided two years' salary in life insurance, which Trish (who handled the finances) thought was sufficient until she talked to a friend of hers who was an insurance agent. Her agent friend warned her that any coverage through work is always a nice bonus, but it’s never a good idea to rely on it. In the event that Scott were to quit, be fired or be laid off, his life insurance coverage would go away, leaving them completely exposed, and if 10 years had gone by, coverage would be much more expensive because Scott was now 10 years older. Most insurance experts recommend keeping your life insurance separate from any coverage offered by work. Consider work-related life insurance icing on your insurance cake. Trish took her friend's advice, and purchased a $750,000 term life insurance policy with a 25-year term. This coverage level would give her enough money to pay off their mortgage, put the kids through school and give her a bit of breathing room if the worst were to happen to Scott. 2. Don’t Leave Your Kids Holding the Bag Kelly, a single mother, always thought it would be a good idea to buy life insurance to protect her children, but something always seemed to get in the way. Money was tight, or time was tight and she just never got around to it. Years later, Kelly purchased a small home; her daughter was then 18 years old and her son was 14. While she didn't exactly live paycheck to paycheck, her budget was pretty tight and didn't allow her much room for savings. One night while driving home from work, Kelly was struck head-on by a distracted driver. She died instantly. While Kelly’s children were forced to deal with the tragic loss of their mother, they also had to face the fact that she left behind only a few thousand dollars in the bank and no life insurance, leaving them essentially broke after covering the cost of a very basic funeral. That is why life insurance is important. Nobody knows what is coming around the corner. If you die unexpectedly, you can leave your spouse or children in a very tight spot. Term life insurance is extremely affordable. A 20-year policy with a death benefit of $500,000 for a healthy female can cost as little as $25 a month. 3. Life Insurance Can Save a Business If a Key Employee Dies John started a tech company when he was 20 years old. Over the years he grew it into a multi-billion business that was consistently on the cutting edge of technology, introducing many industry-disrupting inventions. Even though John now employed thousands, he was very hands-on and had personally come up with most of their major breakthroughs. John’s board of directors was concerned that if something happened to John, the company would suffer a tremendous financial loss. The board felt that a key man insurance policy was needed. A key employee life insurance policy is put in place to protect a business from losses if an invaluable employee dies. The company decided to take out a very large life insurance policy on John, over his strenuous protests. John felt that he was in fine shape and would live to a ripe old age. Unfortunately, John was wrong. He suffered a major heart attack and died a few years after the policy went into effect. Sales and the stock price immediately plummeted after his death, and the death benefit from the life insurance policy kept the company afloat for the next 12 months while the new CEO rebuilt investor trust and got the company back on track. 4. Stay-at-Home Parents Need Insurance Too Mike and Stacy have been married for ten years, and for most of that time, Mike has been lucky enough to stay home with the kids while Stacy has been the primary breadwinner. While Stacy earns a good living, she would struggle to cover the cost of a nanny or other childcare provider if something were to happen to Mike. Mike provides a variety of services to the family. He takes care of childcare, transportation, managing the household and their finances. He also deals with repairs and maintenance for their home. Mike also earns a small income doing handyman services around the neighborhood. They decide that in the event something happened to Mike, a life insurance policy would ensure that Stacy would have enough money to hire the necessary help or take a few years off to stay at home as the family learns to cope with the loss. Sarah purchases a 20-year term policy with a death benefit of $750,000 that will give her the financial means to replace the services Mike provided for the family as well as cover the cost of sending the kids to college. 5. Life Insurance Can Ensure Your Business Survives Todd and Chris started a business together and over the years it grew into a successful enterprise. Their financial advisor recommended using whole life insurance policies to make sure that if one partner died, their family would be taken care of, and the business would survive the loss. Todd purchased a $1 million whole life policy on Chris (and made the payments) and vice versa. Years later Todd was killed by a drunk driver. Chris received the death benefit from his life insurance policy on Todd, which he used to buy Todd’s share of the business from Todd's family. This arrangement allowed Todd's family to be fairly compensated for his half of the business, while also allowing the business to survive without taking the major financial hit of paying off Todd's family. This is called a buy/sell agreement and is a fairly common arrangement for small business partners. Top Reasons Why Life Insurance Is So Important Hopefully these stories have shown you just how important life insurance and "insuring your love" is for the special people in your life. If you still have doubts, here are some reasons why life insurance is a necessity, not an option:
Where Can I Get Life Insurance? If any of these stories struck a chord and you are considering a life insurance policy, you are in the right place. Theodore & Associates can help you assess your specific risks and financial goals before recommending a policy. Whether you need a term policy, a permanent policy or a combination of both, our agents will do all of the legwork for you, gather quotes, and present you with a variety of options that will provide the protection that you and your family need. Start protecting your family today, contact Theodore & Associates now. For more information, please visit Trusted Choice here.
26 Comments
3/31/2020 09:29:29 am
Hi Swetha,
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5/10/2020 12:21:15 pm
Everyone knows why life insurance is important, but many of us choose to ignore the reality of what would happen if we were to die suddenly without the proper protection. The results could be devastating for your surviving family members, leaving them with a large bill for your final expenses, or even worse, loss of the family home because they can no longer cover the mortgage.
Reply
5/18/2020 12:58:11 pm
It's valuable that you point out that life insurance can help take care of your loved ones in the event that you die unexpectedly. I care about my family's financial future, so I'm thinking about buying some life insurance. I'm going to look for a good company that can sell me a life insurance policy.
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5/18/2020 01:18:55 pm
That's a great idea, Nelson! Please let us know if we can help!
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5/21/2020 03:02:50 am
Thanks for the informative post. This post helped me to know some new things about insurance. Keep posting. Please let me know for the upcoming posts.
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5/21/2020 08:55:35 am
We're so glad you're enjoying our blog, Ashok!
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5/31/2020 08:41:48 am
I didn't know that an average funeral costs up to 10000 dollars! It will definitely be one of the reasons why people sign up for life insurance. My husband and I were thinking about getting life insurance lately before we go into retirement in a few years' time. I will let him know that by getting life insurance, we can also make sure that our final expenses are covered by the policy.
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6/1/2020 10:35:34 am
Great idea, Alicia! We are happy to help however we can!
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7/2/2020 11:26:20 am
It's great that you point out that a life insurance policy can help make sure that your family is protected financially in case you die unexpectedly. My family's wellbeing is very important to me, so I'm thinking about buying some life insurance in case something bad happens to me. I'm going to look for a good business that can sell me a life insurance policy.
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8/10/2020 02:27:16 pm
It's great that you mention that life insurance can help your family pay off debts after your death. I want to make sure that my family isn't left in poor financial shape if I die unexpectedly, so I'm thinking about buying some life insurance. I'm going to search in my area for a good business that can sell me some life insurance.
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8/10/2020 02:27:56 pm
My uncle has been having a lot of problems with his health and he is really nervous about COVID-19 and having a lot of problems. He would really like to get some better insurance so that he can make sure that his family can be protected and get the right coverage from a professional. I'll be sure to tell him about how he will be able to have a lot more peace of mind and it can supplement his retirement.
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8/28/2020 03:24:05 am
Life Insurance is a product that covers Risks. It may be financially or facility-wise.
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9/1/2020 02:25:28 pm
It's interesting to know how having life insurance can even save a business if the owner passes away. My husband and I have been thinking about getting life insurance, and now that you brought the business part we will not hesitate. I will definitely start looking for an insurance company so that we get it as soon as possible.
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10/7/2020 12:00:38 pm
Thank you for mentioning that life insurance can help make sure that your children are provided for if you die. I want to make sure that my family will be ok if anything unexpected happens to me, so I'm thinking about buying some life insurance. I'm going to look for a good business in my area that can help me buy a life insurance policy.
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12/7/2020 12:51:40 pm
It's great that you point out that life insurance can help make sure that your family is taken care of financially in case of your untimely death. I care a lot about protecting my family's financial future, so I'm considering buying some life insurance. I'm going to search for a good business in my area that can help me get a life insurance policy.
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1/6/2021 03:16:28 pm
I didn't know that a life insurance policy was capable of providing your children with the finances needed for them to pursue an education in the vent of your passing. My brother has been experiencing some heart complications for the last few months, and he would like to make sure that his wife and children are financially supported if he passes away without warning. He should think about finding a policy that will help keep his loved ones secure.
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1/15/2021 11:42:31 am
It's great that you point out that life insurance can help protect your family's financial wellbeing in case you die unexpectedly. I want to make sure that my family will be ok if anything bad happens to me, so I'm considering buying some life insurance this year. I'm going to search for a good business in my area that can sell me some life insurance.
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2/1/2021 09:09:29 am
As a life insurance agent, I frequently meets with clients who are afraid to buy a policy because of the cost. But, they don't notice that this small payment per month can help his or her family in the long run. It could be an alternative of savings.
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2/23/2021 10:50:06 pm
I am grateful that this post underlined that one of the benefits of life insurance that it will help ensure that all our families will be taken care off in the event of our demise. The other day my friend asked if it would be advisable for him to take up life insurance. I will definitely encourage him to apply for it and proceed.
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3/30/2021 03:18:00 pm
It's good to know that it can help with funerals. My husband and I were wondering if we should look into getting life insurance. I really appreciate you helping me learn more about the benefits of life insurance.
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4/4/2021 08:29:15 pm
Hi,
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5/26/2021 12:53:51 pm
It's great that you point out that life insurance can protect your family financially in case you die. I want to secure my family's financial future, so I'm considering buying life insurance this year. I'm going to look for a reputable business that can help me get some life insurance.
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