Life insurance may seem expensive. As long as everyone is alive and well the value of that costly life policy may be questioned. The money for those premiums may well be wasted. But in the event of an unexpected death, the high premiums suddenly become worthwhile. There can be little doubt that the benefits of life insurance are worth the high premiums.
John and Myra were a happily married couple in their early thirties. They had a three year old son and a year old daughter. Myra was expecting their third child. They had recently bought a new house and were building their lives. John’s career was beginning to take-off while Myra stayed at home to care for the family. Myra’s part-time work provided for a few extras and some luxuries and she planned to resume her career in law once the children were a little bigger.
Myra was at home preparing the evening meal when she heard the doorbell ring. It rang again. Whoever was out there was quite persistent! It was the police. There had been an accident caused by a hit and run driver in the heavy rain. John has been killed.
Myra felt her plans for the future beginning to crumble. Why me, why John? Myra was devastated.
After the funeral it slowly began to dawn on Myra that she had no resources with which to carry on. Even the funeral costs would drain her limited resources. The mortgage repayments alone amount to more than her total income.
Myra has been dealt a double blow. The life insurance that was deemed too expensive just a few months ago would have kept the family on their feet. Now what?
In the long term Myra may be able to overcome this financial blow. In the short term, funds are required and she has nowhere to turn.
Life insurance may be compared to pouring money into an empty hole. But when tragedy strikes the cost is justified many times over.
Life insurance should be only a part of a balanced financial portfolio that includes investments and savings. If the cover recommended by the broker is beyond your means, then settle for less. As your investments grow, the need for life insurance diminishes.
Many life companies prefer to market whole-life or universal life policies that include an investment portion. These are the most profitable types of policy. They pay huge commissions to the broker at the expense of the investment. The premiums are high and the investment rarely performs.
The only type of life policy that you should ever take is a pure life or term insurance. These pay limited commission and the benefits are there to see. A fixed monthly premium will cover you for a fixed death benefit. Term insurance is not expensive for the young. While it does become more expensive as you grow older, it still provides good value for money and will provide a benefit in the event of your untimely death.
Your term insurance should be coupled with a separate investment and the discipline to maintain the investment. Once the term of the insurance has expired, your investment could be enough to cover a major loss. Your term insurance could also include a renewal option that allows renewal without additional medical evidence.
Life cover may be expensive, especially if you have opted for one of the investment type of policies. If you cannot afford the cover you need then you should consider settling for a little less. Some cover is always better than nothing. Before you question whether you can afford life cover, ask whether you can afford to be without it. Life insurance may seem expensive but when a loss occurs, the premiums are repaid over and over again.