Moments ago I read a story that inspired me to write this blog post and lead me to think about who needs life insurance. I was asked to help out a family through a Go Fund Me page. I will not mention names but the story is about a 39-year-old man diagnosed with neuroendocrine pancreatic cancer. This is the same cancer that killed Steve Jobs, founder of Apple. He has three young kids and a wife.
I wont get into the details of his story but will share a few comments he made about his financial situation that I believe many people could relate with…
…“I had a small $500K life insurance policy (we had been meaning to increase the size of that policy for over 5 years but ‘life kept getting in the way I guess’).”
…“Personally, for the last 4 years, I’ve been very resistant to asking anyone for any help. In many ways, I was ashamed to ask because I knew many years ago that we should have upped our life insurance to at least $5M…but my procrastination prevented it from getting done. And being known as a man who has a little bit of wisdom, the amount of folly in not making that a priority for my family has caused me great regret.”
He had a successful business and as you can see by his comments $500,000 is not nearly enough to take care of his family.
I hear stories all of the time from people I visit with about life insurance. It is just one of those things that people so often dismiss or look for shortcuts to simply get “something” in place.
The biggest concern I hear about from older clients is about their term life insurance that is expiring. The second most frequently discussed concern is simply not having enough later in life.
In my opinion, there is so much noise from the media about life insurance that is flat out wrong and there are too few life insurance providers who really know what they are doing. This leaves the public making decisions that are not in their best interest.
Here’s the deal – When we think of our most important assets relating to personal financial planning, we typically think of such things as our home, our savings, a retirement account, or other investments. For most people, these assets make up most of our financial self-worth and are designed to fill a specified purpose or event at some future time. However, when you think about it, our largest asset is really our ability to earn an income. If you take your salary and multiply it by the number of years you plan to work, this is likely a larger number than any of the other assets listed.
The goal this blog is to get you thinking about the things that you have no control over. It is relatively easy to sit and think through the amount of money you will save over ten, twenty, or thirty years, but what if something happens that you have not planned for? The truth is that when we sit and think of the future, we envision successful events and happy times with family and friends. Very seldom do we daydream about an early death or some other circumstance that may affect our long-term outlook. Whatever you are dreaming about for the future, I recommend planning for different scenarios since we do not know what the future truly holds for us.
It is advisable to prepare for the worst and hope for the best while planning your future. This approach gives you the flexibility to work toward your goals while covering your risks. The fact is that there are unforeseen circumstances that could affect your family and your long-term plans. A sickness or deadly accident can leave a family emotionally and financially devastated. If you do not think that can happen to you, take a look around, and it won’t take long for you to see family after family where injury, disease, or an accident has affected their lives.
So ask yourself, how are you doing in this area? Do you feel like you have your bases covered, or are you kicking the can down the road, unwilling to address these matters? Do you have a plan for covering these types of scenarios, or do you have a superman syndrome?
What I have found to be true is that the vast majority of people have done very little to protect themselves and their families from an unforeseen death or illness. Many shrug this off, saying, “I will take care of this later,” or “We have this taken care of through work.” The reality is that later never comes, and your work is unable to provide you with the education and benefits you need to protect your income.
The scenarios are endless, but consider this: what if you and your spouse are both taken from your kids? How will they be cared for financially, and who will provide for their well-being? Some would say, “We have this covered. They will go to my brother or sister.” That’s a great idea, but can that sister or brother afford to take on one, two, or three kids without some financial assistance? The truth is that most families are dependent on their entire income, making them vulnerable to financial devastation if an illness, injury, or death occurs.
To develop a financial plan without gaps or omissions, it is important to take a serious look at how these issues could affect your family financially. As always if you have questions about life insurance or any money related topic let me know. I am happy to try to point you in the right direction.
A policy change may incur fees and costs, and may also require a medical examination.
The article and opinions in this publication are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you consult your accountant, tax, or legal advisor with regard to your individual situation. Kalos Capital, Inc. does not provide tax or legal advice. The opinions and views expressed here are for informational purposes only. Please consult with your tax and/or legal advisor for such guidance.