It’s not likely that I will live long enough to actually hear every argument for not buying life insurance, but the truth is that the only thing that replaces life insurance is liquid assets, wealth.
Life insurance really has two main purposes. Peace of mind is number one. After all, what is any insurance about if not peace of mind that if something happens things will be made financially whole again. Because I am an advocate of term insurance and not much of an advocate of permanent insurance, you really are buying something that you hope to outlive the need for.
If you can ensure that your family will survive an unexpected death for 15, 20 or 30 years at an affordable price, you should have time and extra money to accumulate the wealth that will replace the insurance down the road. The adage that A.L. Williams laid out 30 years ago, buy term and invest the difference, was an idea that was ahead of its’ time then and is very timely now. Back then it was simply an argument against whole life, the “difference” being between the cost of term and whole life. Today it’s just common sense.
Reason number two is all about your beneficiaries. Too many people, especially men, get caught up in analyzing life insurance from an out of pocket cost only and they make it all about them. What is this going to cost me? What else could I have done with the money? What if I just invest that much each year so I will have it to use when I get older? Men have immortal minds in mortal bodies.
If you truly don’t know anyone who has died prematurely, you are in the minority. Friends who die of cancer in their 40’s. Acquaintances who die in a car accidents. I had a friend die this week of a heart attack at age 50. Well, not me you say. Let’s talk about that. In our country 1 in 6 people who reach 25 won’t make it to 64! 1 in 6 adults die prematurely.
I don’t know how many betting people will read this or how many understand that those odds are very high, but try the argument out on your spouse. “Honey. I’ve decided not to buy life insurance because there’s a 5 in 6 chance that I will live to retirement.”
Knowing how little term insurance will cost that will cover your beneficiary’s needs until you are no longer the breadwinner and stacking that up against those kind of odds, buying life insurance becomes a no brainer. The problem is that most men don’t have the kind of brains it takes to think beyond themselves, and hey, I’m a guy so the shot is fair. In all fairness to me, I am an exceptional guy who carries plenty of life insurance.
Bottom line. At some point the sense of responsibility has to overcome the sense of self, or not. I would hope that it does and that life insurance is brought into the context of the right thing to do rather than just another expense.