Life insurance is one of those things that is usually approached with a paradoxical mindset. It’s often put off because death is only something that happens to other people. We get car insurance because we don’t know when a car accident may happen or if it ever will. We get health insurance because we don’t know if we might get sick and need protection. We know the risk is out there and we get insurance because we can’t see the future and we insure the chance that it might. Yet, for whatever reason, despite the certainty of death, we often leave life insurance on the back burner.
Maybe it’s because we don’t want to think about our demise, or maybe we don’t see the benefit. Here are what I consider to be the 4 benefits of life insurance.
Getting Rid of That Extra Weight
The biggest benefit of life insurance comes immediately after you get approved for the coverage. It isn’t something you may be consciously aware of until you have that coverage secure but it happened to me. I felt an invisible weight lift from my shoulders. I had a 100% knowing that if something happened to me, my family would be okay. We push our deaths into the back of our thoughts, but just because we push it out of sight, does not mean it’s out of mind.
For me personally, getting a policy made life seem a little brighter all together. Knowing my family would be ok with or without me took a lot of pressure off of me that I didn’t realize was even there before. If you want to get rid of that extra weight on your shoulders, get a policy in force and move a little lighter through your days. What’s better than less stress?
You Don’t Always Have to Die to Use It
Speaking of benefits, many life insurance companies offer products that offer them while you’re still alive. That’s right, an insurance that’s only supposed to be good when you die, comes with living benefits. Some of these living benefits come in the form of add on’s known as riders that come with your life insurance policy.
These riders are usually called Accelerated Benefit Riders. There is a terminal illness rider, chronic illness rider, and the critical illness rider. Now before you think they all sound pretty grim, they’re actually pretty cool. What they allow you to do is to receive a portion of your death benefit in the event that you get an illness.
So hypothetically speaking, let’s say you were diagnosed with less than 24 months left to live and you have a $1,000,000 life insurance policy. You would be able to get up to 50% (or more) of that to do with as you please. You can use it to pay all the expenses, unpaid by your health insurance, spoil your family, or check off the bucket list. The best part is, if you beat the illness, you don’t have to pay the money back. It will simply be subtracted from the total death benefit your beneficiaries receive.
That’s just one instance where life insurance provides living benefits. It’s literally got the word benefit written in its name. Point made.
It’s a Pretty Wonderful ROI
If you’ve ever owned a business or invested into anything, then you know the value of a good Return on Investment (ROI). While a return on investment doesn’t always have to do with finances, with life insurance, it does. Whether you’re getting life insurance to protect your family from financial disaster or getting a policy to help pay for your parents final expenses, the return on investment is usually favorable.
Consider you’re 40 when you purchase your first policy. The average rate for a healthy 40 year old male is $2,487 a year for a $500,000 permanent policy to age 100. If you live to an average age of 84 you would have paid $109,000 over the course of 44 years, and your family would receive $500,000 if you die. Now consider the fact that you are living to the average life expectancy and opting for a more expensive permanent coverage, yet still getting an amazing return! Usually no matter the policy term or coverage amount you select, you will most likely get a great return no matter how you do the math.
The biggest objection to the return would be the fact that term life insurance expires. Because of this, most people see this as a “waste.” Ignoring the fact that it provided them with affordable coverage the entire time. You don’t consider car insurance a waste just because you don’t go around crashing into things do you? But despite that fact, term life insurance is far from a waste because most policies today come with a conversion privilege at no extra cost.
What does that mean? That means that prior to the term expiring (or old age) you will have the option to convert your term policy to a permanent one, without having to prove your health. So if you were healthy when you got the term policy, but got cancer in the process, you would be able to convert at a healthy rate class on a guaranteed basis. The rate would simply be adjusted to your new age. And at this point you can lower the coverage amount to meet your new, lesser need for coverage. At this point, the kids are all grown up and on their own feet, the mortgage may be paid off and debts are at a minimum. So you can maintain affordability by lowering the coverage amount.
Not only did you get affordable coverage during critical years of financial responsibility, but you also locked in a health class for yourself to be guaranteed coverage. I don’t know about you, but it sounds like a wonderful investment to me.
The Obvious – Protecting What You’ve Built
The most obvious benefit is protecting all your financial responsibilities. We all work hard to secure our family and build our businesses, we want to make sure our partners, personally or professionally, can go on if something were to happen to us. Even if you feel like you lack financial responsibility, you can dedicate a life insurance policy to a cause you’re passionate about, whether it’s pollution or a certain illness, life insurance can be used for charitable giving. Any way you look at it, if it’s securing your family’s future and providing a college education for your kids beyond death, providing your partners with key person coverage, or giving to a charitable cause. In all cases, you’re making the world a better place. Even when you’re no longer here to do so yourself.
A lot of family breadwinners make the argument that they’re currently maximized financially and that’s why life insurance is on hold. From the outside looking in, that is terrifying logic. If you’re maximized now to where you can’t get life insurance, what do you expect to happen if you, as one of the breadwinners, was to pass away? In order for your family to continue the lifestyle you created, you would need coverage in place. That, perhaps, is the biggest benefit.
There are many benefits of life insurance, but those are the ones that stand out. Life insurance is something that gets harder and more expensive to get, the longer you wait. You will never be as young, as healthy, or as alive as you are today. So get a policy in force as fast as you humanly can and insure chance (pun intended).
“Life insurance is usually the last thing a man wants, and then he can’t get it.”