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An Ode to Life Insurance
When I was 16 years old, my mother died. When I was 19, my father did. For many reasons, the experiences were very different; but one of the most striking was the fact that my mother had a valid life insurance policy, and my father did not (because he wasn’t totally honest on his health disclosure forms). The payout from my mother’s policy was small, but prevented me from descending into total poverty. After my father died, his financial support obviously ceased. I spent the rest of my college experience working 40+ hours a week in order to stay in school and get my degree on time (which I did, but with a lower GPA than I would have had had I been able to actually focus on school instead juggling of two part-time jobs).
My friend Glen Asbury wrote a Facebook post today that resonated with me, and I wanted to share it here. He is an insurance agent and he wrote:
In August 2016, I met Barney for the first time. He was 73 years old and had no life insurance. He easily passed all the health questions. I wrote him a policy.
That December, I went back and wrote him another one. The following December (2017), I wrote another one. Cumulatively, I wrote him a total of $25,000. Not a ton of coverage. But for a 73-75 year old man on a fixed income, it cost a bit of a bundle.
On January 10 of this year, his wife called me to tell me she had found Barney in bed that morning, gone from a heart attack. I attended Barney’s funeral that Saturday.
We initiated the claim process for the policies the following week. All 3 policies were less than 2 years old, so they were contestable, which meant the company went through all of Barney’s health records with a fine tooth comb to make sure I told the truth when I answered his health questions.
This last Friday, I delivered the 3 death benefit checks pictured below to Barney’s widow. It was an experience I will never forget. She hugged me and told me that because of the life insurance money, she won’t have to refinance her home to pay a funeral bill.
All I could think was:
What if I hadn’t talked to Barney and asked him if he had life insurance that day when he sat in front of me, the picture of health, a year and a half ago?? Barney wasn’t even the one I went to see! It was his wife who was a Bankers Life client! What if I had weaseled out and not said anything?
Life insurance matters. Everyone should have it. We never know what tomorrow will bring.
Barney’s widow’s tale reminded me of my stepmother, and the experience she had after my father died. She did have to refinance her home in order to pay for the funeral and the mortgage; she had to go back to work as a nurse, and the only shifts available were nights, a grueling experience for a woman who physically and emotionally was gearing up for retirement, not several additional overnight shifts a week.
After we got pregnant, one of the first things I did was make sure that my husband Seth and I had life insurance. It’s a coming of age moment; the realization that we are now responsible for another life, and that responsibility extends past the grave. But I’m glad Glen shared Barney’s story; life insurance isn’t just for folks with dependent children.
Published in Marriage
This reminds me of “A Tree Grows in Brooklyn”. If you haven’t watched it or read the story, I recommend it. The theme of life insurance runs through it, and the insurance agent is a character that shows up.
It is really nice of people to buy life insurance for their dependents.
A great post.
Life insurance is really good the longer you have it.
What’s even better is when you don’t need it any longer. House paid for, plenty of savings and the kids are on their own and have good jobs.
I have a life insurance policy. Janet did not. Mine was large enough to take care of her should I die (although she would also have gotten surviving widow’s from Social Security and my Boeing pension – pegged at 100% for surviving spouse, plus my retirement funds, etc.). Paying for the funeral, burial, and legal expenses (for settling her estate) burned through most of my easily liquid assets (checking and savings). Part of that was having a big cash reserve set aside to pay health insurance expenses until we satisfied the health insurance deductible. Since she died on January 10, most of that went unspent, and I used it for
Not a problem if nothing else goes wrong. I get a good income and a lot of costs drop after your spouse dies (especially insurance). I expected to have my cash reserves rebuilt by August. So, of course stuff does happen. A crown, a trip to the emergency room, stuff breaking down. So maybe by August of next year.
Of course, the irony is the expense to bury me will be much smaller than it was to bury Jan. Part of the reason it cost so much was paying for two plots and a double tombstone. (So I am set for those.) So most of my policy goes to enrich my heirs. (Which was the intention . . . although I had a different heir in mind.)
I would strongly advise families with a single wage earner to either keep a cash reserve or take out a life insurance policy for the non-working spouse to cover funeral expenses. Make it at least $25,000, especially if you do not have a plot and marker. It may be too much, but if it is you can blow the difference on flowers. Fortunately I had the cash. Others, especially those younger than Janet and I may not.
Life insurance should deal with situations from which you would need significant financial relief. In the case cited, the surviving spouse needed money for the funeral. However, not everyone needs life insurance. A retired couple would have saved enough resources to deal with continuing income, funeral costs, and the loss of part of social security would not need life insurance. Indeed, on average the cost of the insurance would be greater than the benefit.
“Everyone needs life insurance” is an overly broad statement. Nearly everyone who has a spouse and dependent children needs life insurance (cf. @oldphil at #4 above). I’m widowed, and I have no children, so I don’t need it any more. I have a policy through my employer, but that ends when I retire.
OTOH, I wish we had had double the amount on my husband, because that would have ensured more security in retirement for me. Hindsight is 20/20, though…..no way to foresee losing him suddenly at only 55 years old. If the situation were reversed, I would have carried the double the amount on myself too, knowing what I know now, to ensure a more comfortable retirement for him.
I really hate to bring politics into a touching story, but one of the arguments for Obamacare had to do with the personal responsibility to buy health insurance, thus the government mandate. I often wondered what the left would come up with next: Mandatory life insurance? Mandatory long term care insurance? Mandatory fitness classes? How far would they go to put government mandates on what should be strictly personal choices?
It is often said we have the right to be stupid and do stupid things. However, almost everything we do has some impact on someone, and this should not be used as an argument to force government interference with our lives . . .
Don’t forget, however, that child-care costs may increase substantially for families whose stay-at-home mothers pass away, absent any other family member who’s able to take on that role; we have a policy much bigger than $25,000 (but nowhere near as large as I’m covered) so that, as Dave Ramsey says, I could go out & “hire Mary Poppins” if anything were to happen to my wife.
We have been for some years in the stage noted by @oldphil in Comment #4 in which we do not need life insurance. We have plenty of money invested for retirement, which either of us could use if the other died.
Per @bigdumbjerk above, while the children were growing up, we carried life insurance on both of us, even though Mrs. Tabby was not in the paid labor force (she was a “stay at home” mom) because it would cost a considerable amount of money to hire the many daily services she did.