It’s About Common Sense
Everyone has an opinion — about everything, including life insurance. There is no formula, to determine the “right” amount of protection for your family, that is consistently accurate from individual to individual. Many advisors and salespeople use formulas that favor higher coverage amounts, and then advise their clients to trust the formula. However, for most people, it is best to engage common sense rather than formulas when choosing your amount of coverage need.
Here’s the bottom line: you need to own this decision — how much you really need. And the good news is, it’s easy once you understand the basics. I explain it in my book, The Life Insurance Marathon. I dedicated an entire chapter to this subject. Here’s an excerpt. Enjoy! 😊
Dead Man’s Bounty
How Much Do I Really Need?
ONCE UPON A TIME everything in life worked out exactly as planned…NOT! Life has a way of keeping things interesting. There are the curve balls, the speed bumps, the under-the-bus experiences, and other personal growth “tonics” for humility that are ever-present for those of us who need life insurance — the living. We get it! “If I die, someone is going to feel like they just got thrown under the bus!” And that’s if you have enough life insurance coverage. If you don’t, the feeling of meeting a freight train in a dark tunnel comes to mind. Choo…choo!
As a life insurance agent, one of the toughest questions to answer for a client is, “How much life insurance do you think I need?”. The vocal emphasis on “you” is very telling. It gives the impression of a loaded question, especially when meeting with a married couple. Two different people, whom I now perceive, may have two different ways of prioritizing this decision. While mentally scrambling to identify which one is the “decision maker”, an agent might think, “I hope I don’t lose one of them as I meander through my response.” And so, the dance begins. It’s a silly way of approaching such a serious and sometimes difficult subject. But it’s the traditional way this has been done for many, many years.
Let’s put all of that aside, place you in the driver’s seat, and focus on what really matters for your family:
• Emotional health, and
• A familiar lifestyle.
Once you have a better understanding of these three priorities as they relate to life insurance, you will be able to identify an appropriate range of coverage for your family. Let’s dive into the information and tools you need to answer the question, “how much do I really need?”
The Emotional Cost of Death
For most people, death is an emotionally charged event. Even when it’s expected, we struggle between the peaceful rest of our deceased loved one, and our own sense of loss. Grieving is a natural process of feeling stuck between the need to let go and accept the reality of death, and the desire to express our feelings to our now deceased loved one. In most cases, when the decedent had been very ill over a long period of time, or was elderly, grieving can occur naturally as we go through our normal daily activities. But when death comes at an unexpected time, grieving the loss can be more complicated, and can take much longer.
Most of us don’t like to think about death, and few want to talk about an actual plan if it were to happen. Yet death is the one thing we can plan for because we know it’s in our future; we just don’t know the details. If we plan wisely, we never need to think about it again in terms of making a plan.
In my experience, it is difficult — if not impossible — to emotionally prepare for the loss of a loved one. However, we can prepare for the financial impact, and that can help to curb negative emotions, as well as promote supportive emotions. Strong financial preparation provides the breathing room we need to properly grieve the loss of our loved one. Weak financial preparation leads to added stress and pressure, which then leads to fear, anger and further sadness. It’s very difficult to focus on healing when you’re trying to figure out how to pay the bills and put food on the table. It’s also very difficult to create a peaceful space for yourself when you must impose on others because you need their support. Moving back home with mom and dad because you can’t afford to stay in your own home can feel humiliating and intrusive, even though your family is eager to help.
Bonus Partial Section – Lifestyle Protection and the Repurposing of Your Coverage
The theory of insurance is to make the affected people “financially whole” after a covered loss occurs. In the case of life insurance, that means you should not suffer a financial loss due to the death of a loved one. Life insurance is somewhat unique in the claim process. Upon death, the claim is very straightforward — the death benefit is paid to the beneficiary.
With auto insurance, when your vehicle is in an accident, the insurance company determines the value of the vehicle. In other words, the auto insurance company is responsible for determining what it means for you to be made financially whole. But with life insurance, that responsibility is yours; you determine the amount of coverage your beneficiary needs to be made financially whole.
Once you begin to understand life insurance, you can take steps to properly protect your loved ones. It’s much easier than most people think!
>>Get the entire book, The Life Insurance Marathon, on Amazon.com.
>>Ready now to get a free quote via email (no salesperson)? Try it here.
>>How much protection does your family need? Find out here.
>>Try PolicyQuest. Find out what type of life insurance policy is best for your situation.