September is Life Insurance Awareness Month (LIAM). The cynic in me wants to ignore it because it sounds like a false holiday used to promote and sell stuff. My experience says differently and I see it as an annual reminder for Americans to review their plans.
Helping a client obtain a life insurance contract was not on my radar screen when I decided to join the financial services industry. The only reason I got my insurance license was my firm said I needed it to help clients. My subsequent training taught me how life insurance is an integral part of a financial plan as it can be used to protect future paychecks against permanent loss.
Then, it happened.
Just eighteen months into my new career, a healthy 32-year old client of mine passed away unexpectedly. In full speed I saw his monthly premium payment turn into a seven-figure sum of tax-free cash. Through his life insurance, the net present value of all of his future paychecks materialized in the checking account of his surviving spouse. That event made a huge impression on me.
Have you ever experienced the following scenario?
You are sitting in a local house of worship, or at work, or in the neighborhood and you hear about the passing of someone you knew under the age of 50. It’s shocking to hear that news. The typical gamut of questions follows: Did they have kids? How did it happen? Some will wonder to themselves or whisper to their friends, was there any life insurance?
Sadly for that scenario, the only time to ask that last question is before the horrible event.
If you’ve not stress tested your household budget for this event in a while, please consider this an important topic that deserves your attention.
Life insurance agents will sometimes encourage people to buy enough life insurance to cover the mortgage. On the surface, that seems to make sense as the family wouldn’t want to leave the house. If your own life insurance portfolio is close to the mortgage or covers the mortgage and a little bit more, then please answer this question honestly and without doing a lot of number crunching.
Imagine that TODAY your bank forgave your entire mortgage. Would you immediately quit your job and retire for the rest of your life?
If you answered that question “no”, then you may want to circle back with your advisor and/or insurance agent and take a closer look at your plan.
The right amount of life insurance is an individual decision and depends on what you personally want to accomplish. Please take the time to get educated and work with an experienced licensed professional that can help you stress test your present plan. If you’re happy with the outcome of this exercise, then you can walk around with confidence knowing that you are all set.
Please take that meeting and know for sure. Please schedule that meeting before the 30th of September.
After all… it’s Life Insurance Awareness Month.
Thank you for reading.