I was visiting my associate the other day and popped my head into her office to ask how her day was going. She had a puzzled look on her face and said, "I've had better days. Have you ever had to deliver on a life insurance claim?" The look on her face was one of complete and utter sadness. She went on to tell me that three years ago she had sat with her client to discuss life insurance. He was a young man with a wife and three children. He really believed that at the age of 35 he was too young to be seriously looking at life insurance. However, my associate saw it differently and continued to educate his wife and him. At the end of their conversation, he and his wife decided to apply for a life insurance policy in the amount of $1.5 million to protect him and his family. Little did they know that in three years time he would be killed quite unexpectedly by a drunk driver heading the wrong direction on the freeway on-ramp. My associate looked at me and said, "I can't believe I have to deliver this check."Now contrast that story with one of my own. When I first got started in finance, I began as a life agent. I had met a very young couple, had connected with them, and made an appointment to discuss the need for life insurance. In the end we took out policies on both of them. A couple of years went by, and in financial terms, they had progressed rather nicely. They had purchased a second home, which was part of their plan and she was pregnant with their first child. It was a very happy time for them. But with the new mortgage and a baby on the way, they had let their insurance lapse. I made several calls to them to reinstate the insurance however they were all to no avail. Sadly, at the age of 32 and on Thanksgiving Day, Sam (not his real name) was hit head-on while on his motorcycle by an RV traveling in his lane. He was killed instantly -- he never knew what hit him. The saddest part is he and his wife had just celebrated the birth of their first child not more than 60 days before hand. Sam left his wife and son essentially penniless. She had quit her job to raise their boy and Sam, as the primary breadwinner, was no longer there. Their original plan was for her to stay home and raise their boy. However now she was juggling grief, raising their son on her own, and working two days a week to make ends meet.
To finish the story, she sold the second home to cover the costs of burying Sam and providing income so she could stay home and take care of their beloved baby. They were very fortunate in the fact that she was able to sell the home quite quickly -- that would not be the case today.
Life insurance can feel like a catch 22. For some folks they feel that if they get life insurance it means they're going to die and so they don't. But for others who understand the purpose and the need of life insurance, it saves them from a tragic financial nightmare. My associate's surviving family although grieving for the loss of their beloved husband and father, will soon have the financial resources to take care of anything they need, with proper management, for the rest of their lives. My clients on the other hand have to abandon their future plans in order to provide for their family.
None of us are planning on leaving this earth before our time. However for some of us "our time" comes much earlier in life than we would prefer. Preparing for the care of our families in this kind of tragedy is essential to the survival of the family, the fulfillment of life plans such as college educations, paying off the mortgage, and achieving other life goals that were important to the family before the unexpected death.
So I ask you, which family would you rather be in at the time of crisis? The choice is yours.
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