Insurance is needed more by the young than the old
So what is life insurance? Most people think it’s necessary for older people who are likely to die soon. Maybe insurance will be needed at their old age for funerals, for last-minute cemetery expenses, or for a wake. In fact, it is at that age that life insurance is not important. Because when a person dies at their old age, no one is financially dependent on them. And everything he has accumulated during his life is left to his relatives, who can use these savings for the funeral. But even if an elderly relative has nothing, the family, of course, will strain to pay for the last farewell, but for them it will not be so critical.
It is much more important when someone depends on us financially. Usually this happens while we are still young, healthy and working. Bringing income into the family. More often than not, life insurance is important to parents.
If dad goes to work and mom stays home, then if the breadwinner of the family doesn’t come home from work, mom will have nothing else to feed the family, pay the bills, and so on. What’s she going to do if daddy who died didn’t have insurance?
So life insurance is very important to replace the income of the person who brings it into the home.If you have two or three children who are 3-5 years old, even if something happens unexpectedly to one of the parents, the children need to be supported for another 15-20 years. That is, the same income that Dad brought in should come into the house for another 15-20 years.
I very often give an example to make people understand. A husband and wife or one of them brings in income. For example, one of them, let’s say daddy, was transferred to work from Florida to Texas. He goes to Texas and the family stays in Florida. Does he send the family money every month? Of course he does. His income goes to the family. But what if Daddy got transferred to heaven? His family’s expenses are still the same. If you have a family, it’s your responsibility to provide expenses for your family and friends after you leave suddenly.
Non-working people also need life insurance
A friend of mine died of an aneurysm suddenly. She left behind a loving husband and a young son. Now her spouse is supposed to be both mom and dad to her son, but instead he has to work, travel on business trips and find strangers to drive his son to and from school. The expenses with an abrupt death, hospital, and funeral are huge, too.
If my friend had insurance, he would have the opportunity to replace his income for at least a few months, if not years, to take care of his son, grieve, hire the right people, and so on.
It’s very important to have insurance, even for a non-working person. Maybe not that big, for $200,000 to $250,000. It’s often very inexpensive, but will help with needs like paying the bills. For example, for a non-working 35-year-old mom, a 30-year, $250,000 policy costs $20 to $35 a month. It’s not much, but what peace of mind for the family.
The less we pay for insurance, the better.
Insurance companies in the United States are rated A.M.Best. It is best to work with companies that have an A+ rating. This is the highest rating. And it most often does not affect the cost of insurance in any way.
There is a very big conflict of interest in the insurance industry. The more the client pays for his insurance, the more the agent earns. There are so many policies designed in such a way that they are profitable for the insurance company, but not for the client. Agents are encouraged by selling these policies to their clients. The customer, because of some unnecessary options, instead of paying $50 for the same amount of coverage, pays $300. And it turns out that even when an agent sells a policy that’s not very beneficial to the client, he doesn’t think he’s committing any unethical act. Because the company educates its clients well enough
But we need to look at things realistically. The less we pay for insurance, the better. Because, most likely, we hope that we won’t need it for many years and we will live happily ever after.
We need insurance for a certain period of time – until the kids grow up, until we have savings.
Choose long-term insurance.
In America there are two main types of policies. The first covers long-term insurance for 10, 20, 30 years. If someone has children who are 4-5 years old now, in 30 years, they will be 35, respectively. It’s likely that by that time the children will have figured out how to support themselves financially.
If we are 55-70 years old, the need for insurance is gone. At this age, we no longer need insurance, but money for old age, savings.
If we buy cheap insurance for 30 years, and at the same time actively save money, then when the insurance runs out, we have the very savings that the policy provided – about half a million dollars. And if we have those savings, insurance becomes less important. So the cheapest way to get life insurance is temporary insurance.
I recommend getting insurance for the longest period of time, so you can be insured until old age, and in parallel, invest for the future.