More on Life Insurance
More on Life Insurance
Here are some of the most popular reasons people give for not buying life insurance, both good and bad.
Still have doubts about getting life insurance? Check out some of the most common excuses below.
"I'm young and healthy --- I don't need to worry about life insurance right now..."
Hey did you ever see any of those "Final Destination" movies --- BAM THE WRITER OF THIS PAGE JUST GOT HIT BY A BUS.
Okay, in real life the odds of dying while you're young are pretty low, but it does occasionally happen. Once you're out of college you should take a moment to ask yourself whether anyone you know would be saddled with the debts you leave behind. Specifically, has anyone co-signed anything for you? If the answer is yes, then consider buying just enough insurance to cover those co-signed debts until you repay them.
"I don't have dependents or a spouse..."
If you also don't have any co-signed debt, then yes, you probably don't need life insurance.
Some people insure themselves and name a charity as the beneficiary, so if you don't have a large inheritance but want to support a cause, this might be something to consider.
"I'm already leaving my heirs plenty..."
Fair enough. You might still want to look over your inheritance with a financial planner to determine whether there will be any tax burdens on your heirs, because a life insurance policy is a good way to pay for those.
"I'm a stay-at-home parent, so I don't have an income to protect..."
Finding replacements for all the types of unpaid work a stay-at-home parent might perform---like housework, childcare, and managing household finances---can be expensive. A policy can cover the cost of hiring outside help, or it can pay for education or training so that the surviving spouse can change careers if needed.
As a general rule, it makes sense to insure all adults in a household regardless of whether they earn income at a traditional job.
I don't have enough money to spend on a luxury like life insurance..."
It's true that if you're currently dealing with a restricted budget then even a modest policy might be out of reach.
Still, it makes sense to think of life insurance as a financial product and not as a luxury purchase. This matters especially if you have kids or other dependents, because a life insurance policy functions as something like an invisible benefactor who steps in to help pay for things in a worst case scenario.
It may be cheaper than you think, too. If you're young and reasonably healthy, for $20-30 a month you can probably find a satisfactory 15 to 20-year term policy. You might also be able to find a cheap solution through a group plan if your employer offers it.
"I'd rather self-insure using my other investments..."
Well aren't you a fancy pants. But yes, if you can afford to self-insure then you might not need life insurance. Or you might want to self-insure through a permanent policy that offers special tax and estate planning benefits---in which case you'll need to work with a financial advisor.
"I don't trust the insurer to pay as promised..."
You're certainly not the only one who feels this way. But what's interesting is people who have had to deal directly with life insurance after a death feel the opposite: they tend to rate their insurers highly and find them trustworthy.
The thing is, these "good" life insurance stories aren't typically shared, since most of us* don't spend a lot of time talking to our friends about death.
* No offense meant to emo or goth people.