Some legit reasons you need life insurance
September 21, 2015
and featuring a Bonus Thought: Sometimes you don’t!
A friend of mine shared a listsicle signature line which made me chuckle. It’s supposed to be sarcastic reasons you don’t need life insurance because haha of course you do. It just makes a strong case for calling it When You Die Insurance because calling it LIFE insurance seems to confuse everyone, including the people who sell it.
Instead of being that know it all who tells someone their signature line sucks, I decided to be an adult and just blog about it.Ā ;D
Six reasons you don’t need life (When You Die) insurance:
(According to the agent)
1. You are never going to die.
Ha ha ha … see that’s funny because it’s insurance for when you die. So you don’t need it if you’re not going to die! Get it?
The implication is probably that you’re going to keep working for the rest of eternity. But if you do die, I mean when you die, you don’t get to take this money with you. It stays here. Just sayin’.
2. You are going to inherit a fortune.
Inheriting a fortune is awesome and if you don’t blow it all, yes, that could replace your When You Die insurance. Let’s keep in mind this is not a good life financing plan because someone still has to die first and that’s just suspect as all get out.
3. You are going to win the lottery.
That’d also be awesome. If you win and don’t blow it all in a year, it’s possible this could be your When You Die insurance.
4. Your children are going to support you.
In death? Is this for zombies? Is this undead insurance for zombies? Hint: Life insurance isn’t for your daily expenses.
5. You are never going to retire.
Does an insurance for When You Die help with retirement? Again, if you have to be dead to collect, it’s not much good to you when you’re alive, you’re working or not. Life tip: Life insurance isn’t your retirement savings!
6. The government will take care of you.
Again, in death? What care do you need after you’re dead and buried / cremated / scattered at sea?
REAL reasons you need life insurance:
- You have minor or elderly dependents who would struggle with one-time or ongoing expenses upon your death, or pets who would need a home and/or require care.
- You have debt that would fall to your survivors to pay without your income: a cosigned mortgage, cosigned student loans, etc.
- You intended to support someone’s major life change like buying a home or though college, whether it’s your own child, that of your spouse’s, or even another relative.
- And your savings won’t cover any or all of the above options that apply to you.
Final answer: When You Die insurance is to cover your debt obligations and to help the living that you left behind, if they need it and you don’t have enough assets saved to cover it.
Therefore, another truth: You may not need life insurance!
If you’re single, have zero dependents whether of the 2 or 4-legged variety, no debt, and don’t intend to pick up any of these things ever? Or you’re married, no dependents, no debt, and the surviving spouse has a good career? Or you have any of those obligations but you have a LOT of savings? Then you don’t need life insurance! Imagine that. Leigh and Linda can attest to that.
At a certain point, if we grow our assets appropriately, we won’t need our life insurance to cover our debt and support LB and Seamus in the event that we both disappear from their lives and deprive them of our incomes. That’s all it is: a guaranteed income replacement for a limited period of time.
But your local life insurance agent would rather you didn’t think that.
This is the best post I’ve ever read on life insurance! Insurance for becoming zombies! I should hope that at some point, people no longer need life insurance, though I guess for someone living paycheck-to-paycheck with a stay at home spouse, they could need life insurance forever? That’s a scary thought though.
Leigh recently posted…August 2015 net worth update (-1.2%)
Yay! I wonder if anyone ever thinks of the fact that you really CAN self insure, if you know what you’re doing and what that really means. I’m thinking of the guy who said he didn’t take Obamacare because he self insured but ran out of money after $10K. That’s very much not self insuring.
The scenario you describe is one where I’d say they absolutely need life insurance!
Okay Revanche, I have a story for you that I would never believe if I wasn’t part of it! I witnessed this with my own eyes!
I was opening the mail a few weeks back at work and I pull out a cancellation notice on a $250,000 policy on my “owners” mother! She’s 77 and her health is deteriorating; plus she’s been a smoker her whole life! They were cashing it out for $77,000. I immediately went through the roof! The story was they were each going to take 1/3rd because she needed some money! That “story” still doesn’t make sense to me but I did receive a notice that the cancellation has been stopped. Are they smoking crack? Idk.
Money is emotional and it causes people to do the dumbest things.
Mrs. Crackin’ the Whip recently posted…One Car – Carpooling Update
Hang on, I have to go find my eyebrows, they flew right off my face.
I’m so surprised you managed to talk them out of it! That kind of foolishness doesn’t usually stop the train for anyone.
I’m worth more dead than I am alive. No joke. lolololol š š
I am too! š
Bill and I have neither one got life insurance for the reasons you state: we have no debt, plenty of savings and no dependents (his kids are all grown; we each have our own funds). I ensure my house because I couldn’t afford to rebuild it without help. We have car insurance required by law, but no more (though separate liability insurance is nearly impossible to get here in the UK). We could afford to replace the car if we needed, but not to pay out a huge lawsuit. I don’t insure my jewellery: what I have is largely sentimental and couldn’t be replaced for any amount of money. I could afford to buy some sort of replacement. In fact, I buy the minimum insurance for the building contents. If we had to start over, we’d manage OK. The Tightwad Gazette taught me to ‘self insure’ as much as possible. Having long ago had renters’ insurance and making a claim after being burgled I discovered that I’d paid premiums for very little, if any, benefit. I don’t pay money to insurance companies these days without careful thought.
That’s precisely the scenario I’m aiming for: I want to be able to replace everything that I own, if necessary, from my own savings and in the meantime not have to waste any money on premiums.
[…] was life insurance month but my take on it may not be the popular […]