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Life Insurance
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| Yes | 81% | 289 votes | Total: 356 votes | |
| No | 19% | 67 votes |
Yes
by Jerome Stone
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Add to FavoritesHad I been asked to write in favor of life insurance 10 years ago, I probably would have scoffed and offered some clich and disparaging remarks about what a racket and scam life insurance is. Here's to the perspective gained through age and maturity. Having witnessed the sudden deaths of good friends who died unexpectedly, or watching others' fortunes drained by unanticipated changes in the financial markets has allowed me a more open and enlightened perspective.
I'm a late starter; I didn't even begin investing in my retirement until I was 36 years old (and lost 50% of it twice so far in the downturns) and didn't start my family until I was 47 years old. So, when I called the insurance broker and asked for information on life insurance, I surprised even my late-blooming sensibilities. Much to the chagrin of my more non-traditional persona, and due as well to the larger cultural context of living in a society where we don't really take care of each other, the fact is that if I kick off now, my son and wife will most certainly end up depending upon the dwindling and abysmal social-services systems that are already stretched to the breaking point. Indeed, it is a sorry sign of the times and of our culture that we don't live in communities where the good of the whole is reflected in the good of the one. In modernity, at least in our cultural modernity, it's all about pulling yourself up by the bootstraps - tell that to the real welfare families who are struggling, in earnest to make a decent wage and whose boots have been whittled down to sorry soles without the depth to weather the cold.
There is no life raft of security for those left adrift by the death of a working householder. Not that financial security has ever been assured in any society, or that our society is somehow less compassionate than those simpler days of yesteryear. In fact, we do take better care of our elders and infirm than many of those cultures that went before us and that are beginning to flourish in the developing countries. And, we don't have debtors' prisons, at least literally, for those unable to pay their credit-card, adjustable-rate, overspent, frill-filled, Wal-Mart special lifestyle (not knocking it here; we're all a bit guilty of backward thinking consumerism). It's seems to have become more cash-intensive to simply live within this society and most families need the incomes of two adults to simply survive, so if one person in a two-adult household (also less common) dies, it behooves that person to have left an assurance policy that their family will not be stranded.
Better, then, that we should pay a (relatively small) sum of cash each month towards that what-if policy of life insurance. In the event of an unexpected death, which usually spells dismal results for those left behind, it pays to pay against the odds to insure that if you do die prematurely (how can one die prematurely when death happens whenever it does, not as if it shouldn't have happened when it did?) your family will not end up living on the streets.
Learn more about this author, Jerome Stone.
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No
The simple reality is that life insurance is a business. A profitable business. Profit generally means that the entity that is profiting does so by taking more money than they return to policyholders. A lot more. Generally speaking, most people don't need life insurance. Those are folks that are typically single, young, and have no children. Young married couples, as a rule, are wasting their money.
The problem with life insurance is that those who sell it, love to prey on the fears of their customers. They'll spin incredible yarns about how your poor family will suffer the consequences, go broke paying your bills. If in fact you are liable, bankruptcy protection has always been available.
Here's the plain truth. If you were worried about someone picking up burial expenses, you could obtain a small policy. If you are involved in a business and the death of your partner might put your business in the hands of an uneducated estate, or if you already have so much money that you need to protect the inheritance from tax loss, you might get a policy to approximate the loss as part of estate planning. There are some other unique situations where obtaining life insurance might be a good idea but those are tailored and situation specific to an individual. For the vast majority of healthy people, particularly those who can live on one income if they absolutely had to, life insurance is simply a waste of money. An obligation that once you start paying premiums, you can never stop or you'll lose what you've invested.
I used to be a licensed life insurance agent, selling primarily term life. Once, I had a client who had died. His spouse was unaware that he even had a policy because the premiums were being dutifully paid for by his mother for nearly a year after his death. The credit life was part of the loan she was paying. I stumbled onto the situation and eventually the guy's wife was paid the 25,000 that the policy called for. I often wondered after that episode with what frequency that situation happens. I can't imagine it happens very often.
Life insurance has a few applications. As a general rule, most people simply don't need it. It is not a good investment unless you have some spare money laying aound and no idea what to do with it. The next time a life insurance agent comes calling, tell him you want some death insurance instead. Ask him if the high divorce rate has contributed to the growth of his company. Most folks would be far better off setting aside their own money, investing it, have control over it, and let the power of time and compounding do the rest. And if you run short of cash, you'll still have your investment-unlike many policyholders who let the coverage lapse and discover that insurance companies don't give refunds.
Learn more about this author, Garrett Anderson.
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