Alright. At some point in the average person's life, they step to the plate of contemplating term life insurance. There's usually some trigger for this forced at-bat (to continue the baseball analogy) such as a new baby or first purchase of a house. A small percentage actually understand the risk involved in not having life insurance and move forward. Most will look the other way and assume "it won't happen to me". Let's look at what happens when people do not purchase term life insurance and the unforeseen happens.



There's such a powerful mental impetus to bury the risk of passing away against the immediate dollars saved by not paying the life premium (even though those have come down significantly in the affordable world of term life). "I will be fine" is just a bit of mental acrobatics to avoid the difficult idea that one may pass away early. After all, it's a horrific thought so it's easy to understand why people do it. Who wants to plan for the worst case. American are especially prone to this "take immediate benefits" over "long term benefits". Take a look at our savings rate versus other countries. We love the "now" and life insurance is mainly concerned with the "later". The problem is that you are not just making this decision for yourself. In fact, if you're in the market for a term life policy, there are loved ones that are financially dependent on you. Let's look at what financially dependents really means when the worst case occurs (which happens every day).

You are the primary or equal bread winner in a family. You have a 3 year old girl and a 5 year boy. You earn $50K annually and your spouse is able to bring in another $25K part-time so that he/she can be involved with the kid's after-school events (which are many!!). Soccer, guitar lessons, PTO, or just trying to keep the various meetings, bills, appointments under some semblance of organization. The call comes in and a family's world shatters. It's the very reason we procrastinate about purchasing term life...we don't even want to think about it...let the possibility enter our brains. We're protected from it that way. But we're not.

Everything quickly spins out of control and the initial wave is emotional and hits like a wall. We haven't even dealt with the long term financial strains...we're just talking about the whirlwind of activity that occurs right away. The lone parent must some how keep the children on some kind of path of normalcy while juggling the calls, arrangements, and unanticipated needs that a funeral brings. People coming and going. Hard questions from the kids. The surviving spouse needs to handle all of this without giving under the pressure and his/her own feelings of being distraught. The funeral and immediate weeks before and after have immediate costs which quickly run 10's of thousands. There's 20K of savings but the thought of using all of that hard-earned and even harder to save money is depressing. It is what it is and there are no other options. You and spouse had $37K in retirement accounts. They may or may not have provisions for drawing from without penalty to your passing but that's not really part of the calculations. A bi-weekly check for $2000 just disappeared. In one month, that's $4K and it takes about a month just to find firm ground to actually look at the credit card bills, mortgage, and just the shear cost of living. With $25K on one credit card and another $5K on another to help pay for food, lodging, and travel during the funeral, creditors are starting to call about the missed payments.

Month two and the chaos has subsided slowly although there are still really hard days. Now, how does the family go from $6K monthly income to $2500? There's no way to bridge that gap. The remaining spouse will have to work full-time and find after-school help for the children, the cost of which quickly offsets $300 weekly against the new full-time income. It still doesn't cover the $2000 mortgage so the house will have to be sold. It's not a good market to sell in but the monthly mortgage simply can't be maintained. It's either sell or lose it altogether. Sold at a discount to the market, the family finds an apartment at $800. The price is better but the schools are worse. It's not a good place to be when deciding between your children's academic experience and a monthly mortgage but it's no longer an option. It's a hard decision...one of many that will be coming over the next few months and years.

The only reason to really flesh out this scenario is ot put in perspective the $30-70 monthly you will pay to avoid this situation. I guarantee, based on our past experience as term life agents, we will receive calls or letters that say "Thank you" for writing this article. If we help only one family avoid these hard decisions...we've done our job.