The disadvantages of life insurance

Young woman checks her phone in a coffee shop.

You may have been laboring under the illusion that life insurance has no drawbacks, that it helps to provide security for you and your loved ones and that’s it. Well, no. Everything has downsides, even cupcakes, puppies and vacations. Life insurance is no different. So if you’re thinking about doing something to safeguard your family financially, here are some things to consider before you go getting all selfless.

First, let’s dispense with the most obvious and least important disadvantage of life insurance – it costs money. This is true, but it’s usually pretty affordable, especially if you get term life insurance (which covers you for a fixed period of time). For most healthy people, term life insurance costs less than a gym membership, car insurance, or a monthly trip to the movies (unless you always go alone). For example, a healthy 30-year-old woman could buy a 20-year, $750,000 Haven Term policy, issued by MassMutual, for about $30 per month.

To really put it in perspective, that’s three times less than what the average person spends on coffee. (By the way, there are studies linking coffee consumption to a longer life, but that doesn’t mean coffee is actually a kind of life insurance, whatever your barista tells you.)

So if cost isn’t the main disadvantage of life insurance, what is? In a word: death. Or, more precisely, thinking and talking about death, which is a common occurrence when you’re considering life insurance, and which Americans prefer not to do. As writers like the New Yorker’s Atul Gawande have long argued, we tend to avoid difficult, detailed conversations about the end of life, even though that avoidance harms us and our families. It’s also notable that only 1/3 of us have living wills. When we read about tech CEOs and hedge fund managers investing billions on research to extend their lives indefinitely, it may seem like childish behavior from people who won’t accept that money can’t buy them everything, but perhaps it’s just the extreme end of a broader cultural tendency to deny, or at least avoid facing, the inevitable.

There’s no denying that talking about death with your partner, or perhaps your children, can be nerve-wracking and distressing. (If you’re single, with an insurance policy going to young kids, you could avoid telling them, making it the only pleasant surprise related to your demise, but be sure that others in your life know about the policy.) However, discussing mortality has real upsides: You and your loved ones start to have important, sometimes surprising talks about preferences for end of life care, what you’d like to happen if you wind up unconscious in hospital, and preferences to be outlined in your wills (which you can create at no cost as one of the several benefits of being a Haven Term policyholder*). Also, facing death makes you think about your life: you pause, take stock, and ask yourself if you’re living the way you want to, which becomes harder to do as you get older and your responsibilities grow.

It’s not just easier life insurance, it’s an easier life.

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Which brings us to another disadvantage of life insurance: it makes you realize how numerous and serious those responsibilities have become. You don’t get life insurance for yourself, you get it for those who depend on you, and it can be daunting to accept that you’ve become someone with dependents, such as a partner and/or children, and financial responsibilities – like debts and a mortgage – that may outlive you. The major advantage here is that by getting life insurance you are facing up to those responsibilities head on, and making sensible plans to deal with them if the worst should happen. You’re behaving properly, with all the discomfort that implies.

One final disadvantage of life insurance is that it may recalibrate your sense of self- worth. We all consider what we’re worth per year, per day or per hour when evaluating wages and salaries; beyond that, ideas about our value tend to be more abstract. But life insurance puts a price on your head, as if you were a wanted fugitive in the Old West. As a friend of mine said with amused glee when the birth of his daughter made him get life insurance, “I’m now worth more dead than alive.” Not everyone finds this funny. If you have such thoughts, there’s probably someone in your life (spouse, parent, bartender) who can tell you it isn’t so, and that your importance on this mortal coil easily exceeds whatever cash value is now attached to your premature exit.

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Happily, life insurance does have a major psychological upside: it makes you think about death less, not more. Once you know your loved ones are protected if the worst should happen, there’s no need to constantly worry about your demise (though this doesn’t mean you should stop looking both ways before crossing the street, or take up squirrel suit jumping.) It’s often said you can’t put a price on peace of mind, but in fact, you can: it’s the sum that leaves your bank account each month to pay your life insurance premium. If you don’t die during the term (which is, after all, the plan) you won’t get the money back, but this disadvantage is easily outweighed by still being alive. Still, if it really bothers you, just consider it an investment in your ongoing tranquility. What else were you going to spend it on, coffee?

Michael Davis is a freelance writer and editor who has covered everything from fashion and music to parenting, work, and finance. He has been a chef, restaurateur and record label owner.

* Haven Life Plus (Plus) is the marketing name for the Plus Rider which is included as part of the Haven Term policy. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual is responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners).

Haven Term is a Term Life Insurance Policy (ICC17DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and may not be available in all states. In New York, Haven Term is DTC-NY 1017. Our Agency license number in California is OK71922 and in Arkansas, 100139527.

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