Life Insurance: Why?

Let’s talk about a really fun topic today: life insurance. Before we get to that exciting topic, I want to excite you even more with a short meta-post.

I sat down and started to write this really long post – what would have amounted to 5+ pages, complete with tables and numbers – and realized that I needed to step back and focus on the most important thing. “Why?”

In his 2009 Ted Talk, Simon Sinek explained that at the center of explaining why organizations or individuals have the ability to inspire while others don’t, lies a central question: “Why?”

But very, very few people or organizations know why they do what they do. And by “why” I don’t mean “to make a profit.” That’s a result. It’s always a result. By “why,” I mean: What’s your purpose? What’s your cause? What’s your
belief? Why does your organization exist? Why do you get out of bed in the morning? And why should anyone care?

One day soon I might write about the “how” of life insurance. I did pull up a bunch of numbers after all. But before I invest the time in that, let’s start with “Why?”

Why Am I Bringing This Up?

If you had asked me 6 years ago what the difference was between whole life insurance and term insurance, I would have almost no clue. I would have barely been able to articulate why you should even have life insurance, beyond “Well, it’s probably a good idea to have some” – not exactly a very logical argument.

Since writing about by 2014 goals at the beginning of the year, and in particular the fact that we want a will in place
so our kids would be taken care of, several people have suggested I buy a “whole life” insurance policy. We currently have
“term” policies in place, and I’ve received lots of council against anything but term, but I figured that it was finally its about time I actually look at the data myself. I will likely share the actual numbers in a future post.

Life Insurance: Why?

Regardless of the numerical breakdowns of different types of life insurance may be, the end goal should be to have some
form of insurance. But why is that important? If you are single, or at least do not have children or anyone else that is dependent on you, you probably haven’t considered it.

The reason is actually quite simple: It is important because you want your family to be taken care of in case you die.

It’s as simple as that.

Consider my family.

My wife and I both work. I work full time, she works 2 nights a week. If I were to die without any safety net, she would likely need to work full time. With that comes more child care – for 3 kids, thats easily $20,000 per year. We still have a house that we are paying for, and I do most of the yard work and other miscellaneous maintenance on it. With me out of the picture, there are some more expenses. Plus, she would still need to take care of all of the usual things like groceries, utilities, bills, etc.

Could she do it? I know she could – she is a strong willed woman who knows how to work. But, it would be difficult.

Here is something else to consider – what she were to die? My world would be turned upside down, and I would feel her loss in many more ways than I could imagine.

Just as if I were gone, the kids would need daycare. I can cook, but I am nowhere near as good of a cook as my wife is. I sense more eating out, or expensive take home dinners. You can put a dollar amount on a part-time or full-time stay at home mom and all of the value she brings to the family, and it’s not nearly as cheap as most people would guess.

So, considering that either of us could die and leave the other in a stressful, crazy situation, we both have life insurance policies. It’s a way of saying “I love you. If I were gone, I would want you and the kids to be well taken care of.”

Regardless of the type of insurance, the ultimate goal – the “Why?” – is to make sure one’s family is taken care of.

There are two very popular types of life insurance, and I hope to spend time in a future post discussing the “How” and “What” – how much to get, how much does it cost, what kind to get, etc.

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