According to the 2016 Insurance Barometer Study by Life Happens and LIMRA, 1 out 3 households would have immediate trouble paying living expenses if the primary wage earner died unexpectedly. Note: I added the word “unexpectedly” to that sentence because let’s face it, most of us go through our lives each day with our minds focused on other things. Very little time or energy is usually given to thinking about “What If” scenarios, especially if it involves our own demise. Believe me, I get it—it’s just not something that we enjoy thinking about.
In fact, the same exact study (the 2017 version) just published a nice infographic that shows us what most people spend their time thinking about when it comes to economic and financial matters:
As you can see, healthcare is a primary concern— followed by retirement and college education planning. Down at the bottom, there is a little bit of space left for the elephant in the room:
“What would happen to those I love if I didn’t come home today?”
“What would happen if I couldn’t physically work any longer?”
The solution to questions and concerns like these isn’t complicated…it’s insurance.
Last week, I had lunch with Marv Feldman, who is the CEO of Life Happens, and I asked him what he thought the biggest mistake people were making when it came to life insurance, disability, or long-term care. Without missing a beat, Marv looked at me and said,
“Everyone knows what insurance is, but few people understand what insurance does.”
In my last post, I wrote about the importance of creating a comprehensive financial plan. In fact, I believe this is the most important thing you can do to set yourself on a course to reach your financial goals. A critical part of that plan is to first consider the major risks and how to eliminate or reduce them.
Most insurance premiums require an investment of 1-3% of gross household income to protect the downside risk for things like dying too soon or being impacted by a disability. This “cost” as so many view it, is really the solution. If you want to see just how impactful life insurance can be, watch this video:
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