Should I buy insurance?
Callum Sutherland - Dec 17, 2021
It is a question many ask themselves because, quite frankly, there are a lot of Insurance products out there. Why purchase life insurance?
"Should I buy insurance?" It's a common question. There are many insurance products available, and the "easy ones" are required by law (for example, car insurance).
My guiding principle when buying insurance for a person or product is "if I don't have it, could it be catastrophic?" Here are two examples. If I don't buy insurance for television and it breaks, it's inconvenient but it's not catastrophic. However, if I don't have house insurance and my house burns down, it's definitely catastrophic.
As someone who helps people plan their lives financially, my main job is to help prevent my clients from making catastrophic mistakes.
Let's talk through a scenario for purchasing life insurance. You have a partner with children and you also own a home. In this example, you're living paycheck to paycheck. What happens if you or your partner were to suddenly pass away? How would the living partner pay all the bills and make sure the children have childcare while still having funds left over for education?
A life insurance policy can help. The extra expense may feel inconvenient but think about what the financial protection could do for a widow with a mortgage and children. Money won't bring loved ones back, but it can help provide stability to families during the grieving period and potentially help keep life as normal (under the circumstances).
You may think I'm pulling on your heartstrings. You're correct, I am! If you think this doesn't happen, how many times have you seen Go Fund Me stories in your social media feed? This scenario does happen. A small monthly payment may feel like an inconvenience but it's worth it. Knowing you've considered such a scenario may help you feel better just in case this happens to your family.
There are other reasons to purchase life insurance and I will talk about them in later blogs. For now, go through your family situation and remove your income. Consider what life may be like for those left behind. Will they live the way you would like them to? You have the ability for pennies on the dollar to allow your loved ones the ability to grieve and not worry about finances.