Psychologically, humans are programmed for instant gratification. So, who buys life insurance? Let’s be honest, it’s not the average American searching for instant gratification, or someone looking to make a fun and exciting purchase.
Not buying life insurance could be one of the worst mistakes that you ever make.
People Who Need It, Buy It
Life insurance is much more of a needs-based purchase. Not many people wake up on a gorgeous Saturday morning to the smell of a freshly brewed cup of Folgers, and think, “What a great day to buy life insurance!”
Unfortunately, someone will most likely buy life insurance only when they need it. In fact, it’s such an after thought, I would argue most people don’t even consider it, let alone discover for themselves what it is, until it is suggested to them. Perhaps it’s required for a loan.
When approaching the younger generations about buying life insurance, it wouldn’t be odd to get a laugh or even a funny look from them. But the truth is, they may be the generation who needs it most.
But the opposite seems to hold true. The elderly are much closer to their expiration, and this creates the urgency to begin looking into a life insurance policy. While it’s still leveraging your money for burial or final expense purposes, it’s not the optimal time to buy.
Maybe you’re concerned that certain health conditions could stop you from getting insurance. Don’t let this stop you from obtaining the insurance you deserve. There are companies who offer Impaired Risk Life Insurance. Perhaps you’re pregnant and want to know if you can qualify for life insurance during pregnancy; we can help.
When Do People Buy Life Insurance
Most people need to purchase life insurance policies for a wide range of reasons:
- New House
- New Career
- New Loan
- New Spouse
- New Baby
Do you see a trend? The need stems from some sort of NEW obligation, NEW opportunity, or NEW long term expense. The fact is, when a major life event happens, you hold a higher level of financial responsibility to someone, whether it be an obligation of repayment, or a replacement value.
When you buy a new home, for example, you’ve created a large obligation of repayment to a lender. It’s not only the size, but the duration in which makes this new obligation so important to have a back up plan for. A house will probably be the biggest purchase of someone’s life when it comes to cost and actual importance (although some might argue retirement is).
But when it comes to life insurance, a new career may actually be a larger event, by the numbers. Although you’re not buying anything, you do have a great necessity to protect something. Your new opportunity yields you a future value, human capital, in which you need to protect for those who depend on it. This can be hundreds of thousands, to millions.
A new baby is a new long term expense. Unlike taking on a new mortgage, a new family member has unknown costs. The roller coaster of payments are going to change during his entire life, and will likely increase as he gets older. As a new born, there are surely lots of things to buy, but throw in the costs of school from age 5 to 18, new clothes to buy each year, and the looming costs of college, and you’ll see it quickly adds up.
The Psychology of Buying Life Insurance
Most often, the majority of life insurance purchases come from two frames of mind.
Even if someone has bought a new house, found the next great job, or just had a baby, it doesn’t mean they are headed right for the computer to start to shop for a life insurance policy. But these events do bring about a sense of necessity, which might at least get the consumer in the state of mind to protect what they now have.
But it’s more than likely the emotional side which is going to really make a person step back and think, “Yeah, I gotta have this.”
Imagine a relative dies. Parent, grandparent, or spouse. If you have a hands-on duty or responsibility to the person’s funeral arrangements, estate settlement, or other financial obligation to handle, and the person didn’t have life insurance, you might actually realize the amount of immediate cash needs. But more so, you’ll see what it’s like firsthand to not only grieve, but gather the funds necessary in a time of great sorrow, a whole new level of stress and discomfort.
Worse case scenario, you might actually now have the burden yourself to replace the funds needed, which can create a lasting repayment process, and a constant reminder of the sad event in the worst form: a bill.
This might actually reveal the importance of life insurance. Without seeing a need, or not having a closer look at what could be your own tale in the future, you might not realize the actual value of life insurance, and you may not make any moves to purchase.
How Much Life Insurance Do You Need?
Aside from realizing that you NEED life insurance, the next biggest issue is deciding how much that you need to buy. As we mentioned above, there are several different reasons that you could be buying a life insurance policy. There are several different factors that you have to account for when you’re calculating your life insurance needs. If you have a new home, you’ll need to get a policy that is large enough to pay off the mortgage if you were to pass away.
If you are having a child, you’ll need to ensure that your family will have the resources they need to replace your income if you were to pass away. If you’re one of the main income earners in your family, your loved ones would struggle financially if anything tragic were to happen to you. There is no magic number for how much life insurance you should buy, it varies from person to person, but most financial experts suggest getting around seven to ten times your annual salary. This will give your family plenty of resources to get through the difficult time without creating any financial pitfalls. You’ll have to sit down and crunch the numbers to determine exactly how much life insurance that you want to purchase to protect your family. No matter if you need $100,000 or a million dollar insurance policy, we can answer your questions and help you get the coverage you deserve.
But what everyone needs to realize is…
You can’t wait until you need it to buy it. It has to happen now. You can’t predict the future. You have no idea what’s going to happen tomorrow, but you can always protect your family against the worst.