Here’s the thing about death: it stinks. A living, breathing human soul is gone and in its place is a cold, rigid corpse. Death leaves behind broken families – parents without children, children without parents, spouses without each other.
In the midst of the grief, a wife may have to go back to work – or get a second job – to try to replace the income her husband is no longer bringing in. Or she may have to move – tearing the family away from the home, school, and friends that are familiar to them – in order to afford to live.
There is nothing you can do to prevent death. You can slow its advent a little, but it’s coming. But you can do something to soothe the financial burdens of death. With all that’s going on, the last thing a mourner needs to worry about is the money. And that’s the problem life insurance was designed to solve.
When an insured person dies, the life insurance proceeds go to whomever the insured named as beneficiary. If designed correctly, the lives of the survivors should be able to resume as they were before, at least from a financial perspective. The family won’t have to move, the surviving spouse won’t have to get another job, the kids won’t have to change schools and make new friends.
If you have business partners, have you considered what would happen if one of the partners died? Unless you make other provisions, the surviving spouse inherits the deceased partner’s share of the business. Do you want your dead partner’s widow as a new business partner? A common use of life insurance is to buy out the deceased partner’s share of the business. This is in the best interest of the business, while also taking care of the deceased partner’s spouse.
And then there’s the eternal question: term or whole-life? While there are situations where one or the other is appropriate, if you have any doubts, go with term. Your insurance agent will insist you’re missing out on all the great benefits. And while that may be true, the term gives you the death benefit you need right now, and some extra time to think about whole-life and make sure it makes sense.
In the end, life insurance is very difficult to talk about. To make it easier, give yourself a deadline. By the end of the year – or quarter, or month – have coverage in place. Make yourself deal with it once, and then it’ll be done.
This article originally appeared in the August 27, 2008, edition of the Greenhorn Valley View.