I was talking with one of my clients during an annual review yesterday, someone I’ve been through a lot with. Our conversation eventually came around to the topic of how often times those for whom life insurance is being acquired to protect often don’t speak out about what really is enough. More importantly they often don’t speak out when what is applied for really isn’t enough.
This client called me a few years back wanting to get life insurance for her and her fiance. They had been together a long time and even though they weren’t married, they were starting to give some thought to the what ifs in life.
We both remember our initial conversations and how, when I sent quotes, I sent them for several different amounts. She had asked for quotes on $250,000. I sent quotes for that and $500,000 and $1,000,000 explaining that at his age and income the higher amounts, if they were affordable were really more appropriate. She distinctly remembers her reaction at the time being that she “didn’t want him to think she was greedy” or something to the effect. In the end she stuck to her guns and stayed with the $250,000.
Her fiance died about a year after the policy went in force, just over a year ago. As we talked about her thought processes and decisions she shared that, in retrospect, she and her fiance should have both given more careful consideration to the amount of life insurance.
Not that she isn’t grateful that they at least did something and not that she is bitter, just that in reality what they had decided to do was just kind of minimally insure each other. Also in retrospect she believes the higher amounts were certainly reasonable considerations and their reasoning for staying low, avoiding the appearance of greed, was really kind of immature (her words).
So, for those of you considering life insurance for the first time or those of you who have taken the low road up to now, consider just for a minute that you aren’t putting a bounty on anyone’s head and you aren’t trying to profit from your own misfortune. Life insurance is actually replacing a financial loss that can be measured and quantified and the only reason you should insure yourself of your spouse for less than what it takes to make the survivor financially whole is if that is just simply not affordable.
Bottom line. Call it greedy or just call it prudent and reasonable. Make sure you buy enough life insurance because there really are no do overs. If you just really don’t know how much is enough, have an agent help you with a needs analysis or use an on line needs analysis tool. If, down the road, you collectively decide that you have reached a financial point of being over insured, you can always reduce your coverage.