You Insured Your iPhone. What About Your Paycheque?
Let's sit down and have the conversation nobody actually wants to have.
Life insurance. It is grim, it is awkward to talk about, and it involves acknowledging our own mortality.
But here is the brutally honest truth: life insurance isn't actually about dying. It is strictly a financial tool to make sure your family doesn't have to sell the house while they are grieving.
In our industry, we tend to bury this in boring jargon like "death benefits" and "beneficiary designations." Let's strip all of that away.
Think of life insurance as nothing more than a highly specific debt eraser and income replacement tool.
Here is the everyday reality of why we need it in our portfolios:
The Mortgage Doesn't Grieve: The bank is incredibly unsentimental. If a dual-income household suddenly drops to a single income, the mortgage payment is still due on the first of the month - or maybe (bi) weekly, if you were that smart cookie that went with the accelerated option [kudos to you] .
The "Economic Engine" Problem: You are essentially a machine that generates $70,000 (or whatever your salary is) every single year. If that machine breaks down permanently, the household economy crashes.
The Cost of Time: Grieving takes time, and sorting out estates takes time. (Seriously, we brokers have to see this weekly. Were talking Month’s and Years, not Days and Weeks).
Life insurance drops a tax-free lump sum into your partner's bank account so they can afford to take six months off work just to breathe and hold the kids.
It constantly amazes me how human behavior works. We will happily drop $15 a month to insure a piece of glass and silicon against screen cracks.
But we will hesitate to spend $20-30 a month to ensure our spouse isn't financially ruined if a gravel truck crosses the centre line on the QE2.
We don't need to complicate this with massive, complex investment policies that cost a fortune.
For the vast majority of us, the answer is a simple, ultra-practical Term Life policy. You just buy a big chunk of coverage for 10 or 20 years while the kids are young and the mortgage is huge.
If you survive the term, great. You lived. You won the game.
If you don't, your family gets a cheque that instantly clears the debt and replaces your paycheque.
Take a few minutes tonight and look at your household budget. Ask yourself how long your partner could cover all the bills if your income vanished tomorrow.
Heck, how long can you cover the bills if your partner was no longer able to contribute?
If the answer makes you uncomfortable, contact Benjamin at McDonalds Insurance. He can run a quick quote and show you exactly how cheap peace of mind actually is.