As we celebrate the month that gave us Valentine’s Day amongst many other celebrations, it is a great time to reflect on those you love as well as those who love you. One of the great joys in life is to love and be loved. Happy Valentine's Month to you and yours.
If you have someone or some people that you love, you should have “Love Insurance”. If you don’t have anyone you love, you may not need love insurance.
For me, love Insurance is another name for life insurance. Some say that having life insurance is the most unselfish act you can do. You will never see the result of this, but if there are loved ones you are leaving behind, you need “love” insurance.
As someone who has worked closely with families for almost 35 years, I have seen firsthand both the great things that life insurance has done as well as some real tragedies created by not having life insurance. This is especially sad when we know our friends or clients could have made a difference if someone had talked to them honestly about not only the cost but the benefits. The discussion needs to be had.
Some employers provide “love” insurance as part of the benefit package. Many people believe this is enough. The problem here is two-fold; the insurance is typically 1-2x salary. How long will that take care of the family? If the family is relying on your income, it will be 3-4 years replacing that income. Will this 1-2x salary pay the debt that you will leave behind? Remember, you are not here and you have just left those you care most about struggling. Second, typically, you only have this insurance while you are working at this employer. If you develop health challenges before you leave that employer, it could be difficult to acquire new insurance.
The amount of money saved in your retirement plan should not be counted to help the survivor. That is meant for retirement. Using these assets, puts your family, (more importantly, your survivor) potentially struggling in retirement. This is especially important since you will not be saving any more into this account once you pass away.
I have had conversations with couples (both young and near retirement), where I ask the breadwinner to remain silent and I ask “Your partner has just passed, you have this amount of insurance and retirement plan available to you. What is the first thing you do? What will your life look like a year from then? Will you stay in this house, will you need to have a job, what about the kids, who will watch them?” Remember, you have 2x your spouse salary. This is a hard conversation.
Personally, I have had “non-employer” provided “love” insurance for 35 years. Early on, I forfeited how much I was saving for retirement to make sure my wife and my new kids were ok if I didn’t come home one day from work. When I give presentations to young professionals, the first step to real financial planning (and being an adult), is not the ROTH IRA, its not the 401k, it’s the bottom of the financial well being pyramid. Life insurance.
I have also bought life insurance for my children when they graduated from college. It was VERY inexpensive and I KNOW they will some day be married, start their own family and will need this. This is my very inexpensive gift to their future. My wife and I are the beneficiary (to replace the costs for their college 😊), but they will eventually change the beneficiary to their spouse.
We recently met with a widow. Her husband was a young professional at one of our hospitals. Under 40, young man passed away while mountain biking. They had two young boys. Her main worry when we met was whether she would have to go back to work and leave the boys with a family member. The family member would have to move closer to her. Would she have to leave the house? She was a professional in her own right, but she was a mom first. She did not mind working, but she wanted to be a mom FIRST. Once we discussed the planning her husband did before he passed, I assured her she was going to get to be a mom first and always. The amount of insurance he had purchased allowed her to stay in the home, not change the fact that she could be home when the kids were got out of school. The retirement assets he had saved already were remaining as retirement assets. It really was heartwarming to tell her that, while she certainly missed her husband, her and her two kids were going to be ok, financially. He had enough “LOVE” Insurance and she now knows it.
To finish, please take a look at how much “love” insurance YOU have. Or have someone you trust, look at the amount. Take an honest assessment of where you are. I know many of my clients are afraid of how much life insurance a financial planner will tell them they need AND the cost of it. Don’t be afraid of what you don’t know. Your family is relying on you to ask these questions. We have also had parents paying for a life insurance policy for their kids and future grandkids to make sure they know the importance. Again, life insurance for a young person (over 21), is surprisingly reasonable. What a great gift for the future in-laws and your future grandchildren. We have seen too many sad stories to not have this conversation.
Happy Valentine's MONTH. How much Love Insurance do YOU have?