Everyone is aware that one's life might end at any moment for no obvious cause. But when I was in my 20s and healthy, I never gave the idea of leaving my family members behind more than a passing thought.
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| Life Insurance became Essential when my buddy died at 27 |
In January 2010, I got a message on Facebook telling me that one of my best friends from high school, Matt, had died in a car accident. He left behind his wife Tricia, his high school crush and a good friend of mine, and their three kids, the youngest of whom was only six months old.
I went to his funeral with my friends from high school. Not even a decade had passed since we helped Matt ask Tricia to the prom, ate take-and-bake pizzas at game night, and put on school musicals. All of a sudden, I became very aware of my death.
Over the next few months, I talked to Tricia about Matt's death and what to do when someone close to her dies. At 27, I had no idea how things would work, but since she and I were both stay-at-home moms at the time, I paid attention.
"How can I get ready for this if it ever happens to me?" was a big question in my mind. Because all of a sudden, I thought it could.
The comfort that is afforded by having life insurance
I was happy to see that Matt had term life insurance coverage. This meant that Tricia had the financial resources necessary to take care of the last preparations and her young children without hurrying from a mourning widow to a working mother.
The situation that happened to Matt and Tricia is an example of the kind of danger that this sort of protection is intended to reduce and can occur to anybody. Term life insurance, contrary to many other types of life insurance, is straightforward: if the insured person dies, the beneficiary of the policy will receive a one-time payment that will not, in most cases, be subject to taxes. It is not connected to any savings or investment vehicles; instead, it is designed to assist your loved ones in paying for your burial and replacing part of your income if you pass away.
Finance experts strongly advise young couples with dependent children to get term life insurance, mainly when one partner is the sole income. This enables the remaining family members to take care of the funeral expenses, which typically range from around $7,000 to $9,000, and eases the financial burden on them.
It is important to note that life insurance benefits couples who want to stay home with their children. Someone has to undertake the unpaid work they do (such as cooking, cleaning, childcare, making appointments, paying bills, and more), and mourning partners may not be able to carry the entire load alone. The ability to outsource some of one's home chores to a third party is made possible by purchasing a life insurance policy on the non-working partner.
The number of underinsured Americans needs to be more sustainable
In 2011, 63% of Americans held life insurance, but by 2021, that number had dropped to only 52%, according to research conducted by the Life Insurance Marketing and Research Association. According to LIMRA's findings, 102 million Americans lacked enough life insurance coverage or require further protection.
According to the study's findings, 42 per cent of respondents indicated that they "will indeed face economic difficulties within six months" if a wage earner in their residence passes away. Given these results, it is safe to assume that a sizeable portion of the population needs the protection that life insurance can provide.
Having life insurance is recommended for the vast majority of homes. However, it is only sometimes required for specific scenarios. Ask yourself these two questions to determine whether or not it makes sense for you to get term life insurance:
Is there anybody else who depends on the money I make or the work I do?
If I passed away, would my family have to deal with a lot of financial stress?
If you answered yes to any of these questions, consider purchasing a policy that provides coverage for a certain period of your life.
Some kind of life insurance is preferable than none at all
A common rule of thumb is to begin a policy with a payment that is ten times your salary, but this is just simple math on a napkin. You might need a lot more or a lot less, depending on your monthly mortgage, how much you have saved, how much debt you have, if anyone in your family has particular healthcare problems and a lot of other things. Tricia told me later that the life insurance she and Matt chose was enough to take care of her family, but things might have been easier if they had chosen twice as much.
Even if the amount of life insurance you choose isn't exactly right, it's safe to say that having some is better than having none.
Because of Matt's death, I will never look at term life insurance the same way again ever since it has not been a luxury in my budget. Instead, it is a must-have. The story of Tricia could have been mine.
I'm glad that two of my friends at age 27 were more intelligent than I was and got life insurance to safeguard their young families. If they hadn't planned and thought ahead, one tragic event could have easily turned into two.
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