Just In Cases – You Do Need Life Insurance

My mother had the biggest crush on Harrison Ford in the 1980s, so big that this poster hung in our home for years.

Indiana-Jones-Temple-Doom

I have to admit that I admire mom because she did not allow motherhood to keep her from getting what she wanted out of life. In 1984 what she wanted was to see Harrison Ford as Indiana Jones in the sequel (but really a prequel) to Raiders of the Lost Ark. What do you do when you’re a parent of a five year old and a three year old and there is no babysitter on a Sunday afternoon? Well you bring them with you to the matinee showing of a film that features child slavery, the consumption of chilled monkey brains, and live human sacrifices. I have to appreciate my mother’s willingness to sacrifice my ability to sleep without nightmares in order to share her love of a shirtless Harrison Ford with my brother and me. Even though in 2017 woke hindsight I’m realizing that the film was probably kind of racist,

a little bit

to this day it is still one of my favorite films. Indiana Jones taught me valuable life lessons, the most important of which came as he and Short Round were about to be crushed by booby trapped walls.

We are going to die.gif

Truer words were never spoken. Although nightclub singer Willie Scott managed to overcome her fear of being covered in insects to pull the release just in time to save them, Indy was right. He and Short Round were going to die, maybe not that particular day but inevitably. In fact, we are all going to die (hopefully not in a booby trapped tunnel or by human sacrifice). Since it’s pretty much unavoidable (unless you’re hanging out with Helena Cassadine) then I highly recommend that we all

be prepared

Now I do not mean to select the right outfit for your deathbed. I’ve never died, but from what I can tell death impacts survivors not the deceased (at least here on earth). Beyond the emotional toll of losing a loved one, there is the financial impact of lost income, unpaid debts, burial costs, the transfer of property, and more. I am a firm believer that everyone needs an estate plan regardless of the amount of assets owned. However, maybe even more important than an estate plan is life insurance, and unfortunately way too many of us are either underinsured or totally uncovered.

If you’re a Gen Xer like me (yes 1980 is Gen X. Call me a Millennial or X-ennial and

slit throat), you likely have aging parents who are starting to experience health issues. I know that death is a difficult topic to discuss and no one wants to talk about money, but it is imperative to know what preparations our parents already have in place to at least handle funeral costs. Go Fund Me is not a plan. Hopefully, your parental units have at minimum a burial policy. If not, then it should be a priority to get them insured. If that isn’t possible due to age, health, or cost then now is the time to understand their wishes and figure out a savings plan to make it happen. My father, bless his immigrant heart, has made it unquestionably clear that although he intends to retire in his home country that if he should die in these here United States then we are to ship his whole intact body back to Africa. I asked him if he had “ship my body back to Africa” money. He promised that the death benefit from his life insurance policy will more than cover it.

Although the death of our parents is a more immediate concern, that doesn’t mean we can neglect preparation for ourselves. While many of us have life insurance coverage through our employers it is likely wholly insufficient in the case of an unexpected death at a younger age. My (soon to be ex) employer offers outstanding benefits including life insurance coverage. As good as the benefits are the life insurance policy is only worth 2X my annual base salary. That’s fine for me considering the fact that I am unmarried and don’t have dependents. For an employee with a spouse and two children that doesn’t even meet the 10X salary rule of thumb once held as the standard coverage calculation. There are several methods to calculate the amount of coverage needed. Nerd Wallet gives a good overview to get you started. It is important to remember that the primary purpose of life insurance is to replace the monetary value to a household of a parent or spouse (income earning or SAH) in the event of death. If an income earner dies 30 years prior to retirement age the surviving family will need that money replaced. Although middle market ($30K-$100K income) Black Americans are more likely to carry some type of coverage, many of us are underinsured. I highly encourage speaking to a financial advisor to determine coverage amounts and the best insurance vehicles for your needs.

It is also important to note that life insurance is one of the biggest means of wealth transfer in this country. Let’s take a second to keep it all the way real. A lot of people take issue with the idea of their death making someone else wealthy. However, passing down wealth is not about riches but rather assets. A $250K death benefit likely isn’t setting up anyone for life, but it can pay college tuition, pay off a mortgage, provide capital for a new business, or purchase a rental property. Getting even more funky with it one of the biggest drivers of the racial wealth gap is the lack of generational transfers in the Black community. Not only are White people two times more likely than Black people to receive an inheritance, but those inheritances are three times as much. Add to this that we are more likely to die earlier than our white peers. A 50 year old Black man has a three times greater chance of dying in the next 10 years than a 50 year old White woman does. If you’re a middle-income Black man like my daddy is then at 50 years old you’re likely to be right smack in the middle of paying for at least one child’s education. Not the time to lose an income.

Life insurance allows us to transfer to our loved ones potentially hundreds of thousands of dollars that we didn’t have to work for or save. The younger and healthier you are when you get coverage the cheaper it is to pass that money on to children, siblings, spouses, nephews, cousins, play cousins, and that aunty who ain’t really your aunty but you call her aunty anyways. And the best part is that the people we love get the benefit of all of these dollars tax-free, because when it comes to life insurance roads and shit do not matter.

I stumbled upon the wonderful world of life insurance in early 2016 when friends were passing around referrals for a financial advisor. I chose to significantly increase my coverage for two reasons. I do anticipate having a family of my own and wanted to lock in at a lower cost. Secondly, I have a strong desire to pass on wealth to my family no matter who is in it at the time of my death. I greatly benefitted from the generational wealth that my grandparents provided and want my peoples to have that same gift. I chose to go with Northwestern Mutual because they are an established company with an excellent rating, didn’t profit from the human subjugation that was American chattel slavery, and I immediately connected with my financial advisor. Making sure that your family’s financial future is secure even if you won’t be there to see it is one of the most important bricks in anyone’s financial house. I recommend doing the research to find the right company, advisor, policy, and coverage level that makes sense for your long term goals. You ain’t gotta do it like I did it, but you damn sure better do it.

 


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5 thoughts on “Just In Cases – You Do Need Life Insurance

  1. Great post. I’m in the middle of re-upping my life insurance right now. I’m looking to increase it some, because I’m making more now than when I got my original policy 7 years ago. I’m getting a new policy a little early because I want to lock in a lower rate now and extend it for 20 years instead of waiting until after I hit 40 and trying to deal with it then.

    Like

    1. Hi Dreamer! Thank you for commenting. The increase in rates after 40 is staggering. I’m trying to figure out how to get on board the long term care insurance in the next year. Now the costs for that coverage after 40 years of age is like WHOA!
      Glad you found your way to my corner of the personal finance universe and I hope you come back and visit soon.

      Like

      1. I’ve thought about the long-term care insurance, too. Unfortunately, I’ve also heard several podcasts talking about how that market is in all kinds of trouble right now because it was priced too low out of the gate. So rates are going absolutely crazy and you can’t really get a handle on it. Kinda scared me off of looking at the moment. I’m also reviewing my disability policy now to make sure that’s up to snuff! Love your writing style and looking forward to seeing more articles in the future.

        Liked by 1 person

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