It’s unusual to find anyone who thinks that life insurance is your most important coverage. Most people are more inclined to think that health insurance is most important, and without much hesitation. Does it really matter? After all, shouldn’t you have both types of coverage?
In a perfect world, having both life insurance and health insurance is certainly preferred. In the real world however, people are forced to make choices based on limited financial circumstances. People often do without life insurance in an attempt to save money. And while the staggering number of people who don’t have health insurance has been well documented in the media and in political circles, the much larger number of people who have no life insurance gets hardly any mention at all.
To put this in perspective, 62% of Americans have life insurance. But that means that 38% don’t. It also means that well over 100 million people in the US have no life insurance. The highest number cited for people going without health insurance was 50 million – only half as many.
Does it matter? I think so.
Life Insurance vs. Health Insurance
The vast majority of people would never go without health insurance if they could possibly avoid it. The fear is sustaining a major illness or injury, then either being unable to afford necessary treatment, or being swamped with crushing bills after receiving it.
Those are certainly legitimate concerns, and they represent a direct threat to many millions of people. But there are mitigating factors when it comes to health insurance.
For example:
- In an emergency situation, a hospital is required by law to treat you, whether or not you have health insurance.
- Payment plans and debt forgiveness can often be worked out after the fact.
- If all else fails, you can always get the necessary treatment, then get debt relief through the bankruptcy courts.
This isn’t to say that any of this should be taken lightly. But let’s consider for a moment those options, versus the choices that will be left to your loved ones in the event of your death. It might help you to understand why having adequate life insurance is at least as important as having a solid health insurance policy.
Not Leaving a Financial Mess for Your Loved Ones to Clean Up
When we think of final expenses, the first thing that comes to mind is funeral expenses. A modest funeral can cost anywhere from $10,000 to $20,000, which is an amount that can usually be paid from a lot of people’s estates. If you have substantial liquid assets, you may not be terribly concerned about this cost.
But the expenses that are incurred prior to death are often considerably larger, particularly in the case of a protracted illness. There can be uncovered medical bills running into the tens of thousands, or even hundreds of thousands of dollars. Then there can also be the residual effect of lost income. If you were out of work for months before your death, it’s entirely possible that your liquid assets would be drained by the time you die.
It’s even entirely possible that you will incur a significant amount of debt in order to meet expenses in the final weeks and months of your life.
If you die without adequate life insurance, your family will be left to deal with all of those expenses. A good life insurance policy will spare them that burden.
Replacing Your Income
If your family is dependent upon either your income or your services, then imagine how life will be for them after your death – in the absence of adequate life insurance. (“Services” includes taking care of children, managing finances, running the household, etc., all of which will have a financial cost following your death.)
At a minimum, there should be enough insurance to enable your family to readjust to life without your income or services. This should cover a period of at least two or three years, even if you don’t have dependent children.
Your family will already be struggling with grieving your loss, so adding financial survival burdens to that struggle can make it close to impossible.
You can have the best health insurance plan in the world, and it will do absolutely nothing to replace your income or services upon your death.
Life Insurance Is Your Last Financial Contribution To Your Family
This benefit does not necessarily have a dollar figure attached to it – it’s more emotional in scope. But a good life insurance policy will represent your last financial contribution to your family. Even though you won’t be around to take care of them anymore, your life insurance will provide you with the last opportunity to help them live lives that will be as close to normal as possible in your absence.
You Owe It to Your Family to Provide the Most Coverage at the Lowest Cost
None of this is to say that health insurance is not as important as we think. But it is to show that life insurance is at least as important. No, it doesn’t have a living benefit to you during your lifetime, but it will mean only everything to your loved ones after your death.
That makes a strong case to maintain the most life insurance coverage at the lowest cost possible. We’re here to help you do that. A good term life insurance policy may be more affordable than you think. Give us a call and let us show you how to make that last financial contribution to your loved ones.
