Your Money: No One Will Miss it ’til it’s Gone!

Procrastination is a killer!  It kills time, it kills ideas, it kills progress, and it kills opportunity.  In short procrastination kills the future.

Interestingly, procrastination is not something that is easily identified, especially by those who are involved in it.  But the consequences of procrastination are similar to the consequences of losing something of value.  Until the loss comes, the value of what is lost is too often taken for granted.

For example, recently there was some dental work that I needed to get done.  It included pulling a tooth and replacing it with a bridge which was then to be replaced with an implant.  In the meantime, COVID-19 struck and all “nonessential” dental work came to a screeching halt.

Guess what?  I definitely have a different definition of what “nonessential” means than the Governor of Nevada.  But the crazy thing is, until my tooth got pulled, I took it for granted that it would always be there for me, biting, chewing and helping me masticate my food, not to mention making my smile look more presentable.  Furthermore, now that I can’t have that implant work done, I miss that tooth even more than when I knew I could get it replaced.

That is the way the human mind works.  We don’t really appreciate what it is that we have until it is gone.  This often encourages procrastination instead of getting things done when we can and should.  One of those things that too often gets pushed to the back burner is life insurance.

As of February 2020, 9 million households only have group life insurance which on average means they are underinsured by $225,000.  Unfortunately, most people don’t realize that without adequate coverage on their life they are setting up untold consequences for their loved ones.  Those untold consequences could come in the form of:

1. Having to reduce their budget:
   1. Educational
   2. Entertainment
   3. Housing
   4. Standard of living
2. Facing increased costs:
   1. For childcare
   2. Training for new skills
   3. Maintenance, yard care, homemaking, etc.
3. Distributing the estate:
   1. Time involved in executing the will
   2. Transfer of assets to the survivor(s)
   3. Closing checking and bank accounts
   4. Overseeing the transfer of IRA, 401k and 403b balances
   5. Changing auto and home insurance policies
   6. Finalizing any outstanding loan balances of the deceased
   7. Taxes

How to Know if You are Underinsured:

The simplest way to know if you don’t have enough life insurance is by asking the question, “How much money will my family need if I die in order to continue their current lifestyle without my income?” (Or income equivalent…if you are a stay at home spouse.)  In other words, how will your spouse and children continue to function without your income, tomorrow, next year, 5 years from now and even in 20 years and later?

You see, life insurance is first, and primarily, a replacement of income lost due to the death of a breadwinner.  But that isn’t the only thing that should be considered if you want to know if you are underinsured.  The next question you need to ask is, “How much money will I need to have every year I live once I retire?” Because life insurance can provide living benefits as well as death benefits.

When considering death benefits alone, many advisors will tell you that term life insurance is the cheapest type of life insurance to own besides group life insurance.  But both term and group life insurance have their limitations.

• Group insurance is typically only available while you are working for the employer who either provides or contracts with an insurance company to provide you with low premiums. If the employer decides not to renew that contract or you become unemployed by that employer, your life insurance could be dropped.
• Term insurance is cheaper to purchase if you are young and healthy, but it provides no long-term solutions because the cost of it will increase overtime to the point it will become unaffordable. Besides, term insurance doesn’t build any living benefits for you. So, term insurance is only for the death benefit and that is not the only reason to own life insurance.

Other reasons for owning life insurance are:

1. Transfer of wealth
2. To save money
3. Liquidity in estate settlement
4. College funding
5. Charitable gifting
6. Retirement funding
7. Business purposes
   1. Key Person
   2. Funding Buy/Sell agreements
   3. Special Executive Retirement Bonuses

Regardless of the reason(s), 43% of Americans are uninsured today.  For some, this may be because they think it would be too expensive. For others it may be their fear of needles, or perhaps they’ve never really given it any serious thought.  For many however, it is merely too inconvenient. But in reality. all these excuses are procrastination.

In today’s life insurance market, the cost of insurance has never been lower.  As far as needles go, many companies no longer require an examination for life insurance if you are not applying for more the $1,000,000 and are younger than 60 years of age. As for having never given life insurance a serious thought, perhaps thinking about how your spouse and children will remember you, if you don’t give it some serious thought while you are still present with them, will help you overcome procrastination.

For sure, they won’t miss the money until it’s gone. But the same goes for you.  You won’t miss the money until it’s all gone either.  According to the U.S. Bureau of Labor and Statistics, if you are 65 and older you only have 9.7 years to live, on average in this country, before running out of money. Properly funding participating whole life insurance can help you overcome this average statistic so that you don’t find yourself living the last 10 to 12 years of your life on a meager Social Security benefit alone.

Don’t let procrastination kill your future.  Call 702-660-7000 or click here to schedule your appointment and get started today.