I hate bad luck. And dying prematurely is the worst bad luck there is! I don’t know about you, but I go through strings of bad luck every several years, which makes me question whether I’m sometimes cursed.
For example, Rhino wouldn’t start one morning so I had to call roadside assistance to have them jump him so I could then drop him off at the service department. He was in the shop for a couple days and the day after I picked him up, he wouldn’t start again! I had to cancel my roadtrip to Lake Tahoe that morning to take him back to the shop and waste another couple hours of time. While I was driving around in a rental car, I was pulled over and given a $160 ticket because I was looking (not touching) at my phone on the center console for directions while stopped in traffic. If Rhino had never died, I never would have got a ticket because my phone would be in the phone mount as usual.
The reason why I hate bad luck is because it’s outside of our control. We can do everything right, but still not succeed due to unfortunate circumstances. As they say, it’s better to be lucky than good! I see life insurance as a bad luck insurance policy.
A Selfless Act Of Kindness
When you pay for something that benefits another, that’s by definition a selfless act of kindness. Perhaps the joy of helping people is exactly why I have spent so much time writing over the past seven years. But life insurance also makes me feel better about life in general because I’ve imagined these various scenarios before:
1) I’m in a serious car accident. During my final moments , I’ll think about all the things I did and didn’t do. Most of all, I’ll think about my loved ones and how I’ll never see them again. One thing that provides me with peace of mind is knowing that my term life insurance policy will pay out to my beneficiaries in order to minimize any further disruption in their lives.
2) I’m flying overseas and my plane loses both engines. I’m not afraid of flying, but I always text and email as many loved ones as possible before I take off because I never know whether it’ll be the last time I communicate with them. In my final moments, I’ll know that because of my financial preparedness, my family will be taken care of.
3) Right after I turn 50, I feel a pain in my lower abdomen. I go to the doctor to check out what’s wrong and it turns out I have pancreatic cancer and a grim prognosis. Thank goodness I bought life insurance while I was still healthy! During the time I have left, I’ll do everything I can to live life to the fullest. If I don’t have kids by then, the benefits will go to my wife. If I don’t have a wife or kids, the benefits will go to my sister and a charitable organization I care about. My death would give purpose and financial assistance to someone else.
I can’t be the only one who has thought about these accidents happening to them. Before I got life insurance, I did wonder more often when my ultimate bad luck would come. Now, I don’t think about unfortunate events as much because the people around me are taken care of thanks to life insurance and my will.
I want life insurance to minimize disruption in my survivor’s lives. I don’t want them to be forced to sell the house because they can’t afford the mortgage payment. The grieving process takes time. The more stable the environment for grieving, the better.
Life insurance needs aren't one-size-fits-all.Calculate your needs
There is a Price For Everything
People have asked me why get life insurance if I have a large enough net worth that makes me ‘self insured’ already. But given I view life insurance as a selfless act of kindness, I like to consider life insurance a “bonus” on top of my existing net worth. The benefits are viewed as making up for the sudden pain.
Since $3 million is the new $1 million, I took out a $3 million, 20 year term life insurance policy for my family at a cost of about $200 a month several years ago.
Because my beneficiaries will inherit all my investments and properties that generate ~$200,000 a year in passive income + my online business, the $3 million will be icing on the cake for them to live the most financially free life possible long after I’m gone. This makes me happy, because again, I’ve always felt it my duty to provide for the people around me. What would tear me up is not being able to provide for anyone because I’m dead.
Calculating How Much Life Insurance Is Needed
A good way to understand how much life insurance you need is by estimating how much debt you have or calculating how many months of your income is needed for how long a period of time. Six to ten times your income is a common recommendation. If you have children, then consider not only your debt but also the cost of tuition to cover.
Another way to calculate life insurance and determine whether you need a million dollar life insurance policy is by asking your beneficiaries. Asking will force your beneficiaries to talk through their finances with you so that everybody is on the same page.
If you’re a healthy 35 year old man, you can get a 20-year, $500,000 term policy from Haven Life for just $21 a month. Assuming you get the most favorable underwriting class.
That’s the cost of a couple rubber chicken sandwiches. Not a bad deal for insuring against bad luck. You can check out their life insurance calculator for help understanding your needs, or you can just jump into getting a quote.
If there’s nobody in your life you want to take care of after you are gone, then there ‘s no need to get life insurance. Just make sure your will is clear. I believe in leaving a positive legacy. Life insurance is just one way to help others.
Life insurance that's actually simple.Estimate your rate
This post originally appeared on Financial Samurai.
Sam Dogen is the founder and writer behind Financial Samurai, a personal finance blog where he educates readers on achieving financial independence.