We All Need Life Insurance

For those of you who have had a baby, you will remember leaving the hospital with a bag of “stuff”. Trial size package of diapers, wipes, formula, ointments, suction thingies (gross!), coupons and crumpled in the bottom of the bag was an offer from Gerber. We all know the Gerber Baby, the most recognized baby face in the world! Although cereal and baby food was the first thing that came to your mind, that’s not what the offer was for at all. The offer was from the Gerber Life Insurance Company. What? Yes. In 1967, Gerber created the Gerber Life Insurance Company as a subsidiary of the Gerber Products Company. Today, Gerber Life offers a full line of life insurance plans designed to help babies and their families enjoy a more secure financial future. I want to say that again. Gerber Life offers plans designed to help babies and their families enjoy a more secure financial future. Gerber gets it!

Why on earth would you buy life insurance for a newborn? I have had more than one client get upset with me when I recommended doing just that. Their initial response is often “I wouldn’t dare bet on the life of my child” or “I couldn’t bear to gain from the death of my child”. I am not asking you to do either. I am, however, asking you to give the gift of life insurance to your child. I worked with a lady years ago who did just that. She and her husband purchased a $250,000 permanent life insurance policy for their son when he was 2-years old. When he was ready to go to college the cash value helped him buy a dependable used car, purchase books and supplies. At the age of 20, her son was diagnosed with Crohn’s disease and immediately became uninsurable. Had his parents not made the decision to purchase a permanent life insurance policy on him at such an early age, he would have no coverage today. That may not seem like a big deal to you. But as you read and learn more about what it is, how it works and exactly what it can do for you and your family, you will discover that not having coverage is a tragedy on so many different levels.

As of November 2023, 102 million Americans are uninsured or underinsured. Among Americans without life insurance, 59% understand that they need coverage. Less than 2 in 5 single Americans own life insurance compared to more than half of married people. But why? According to research, the most common reason people don’t own life insurance is that they have competing financial priorities. Said another way, they think they can’t afford it.

I believe there is yet another reason. I believe most consumers today have monstrous misconceptions about life insurance. Rather than taking time to learn about the product and how it has evolved over the years, they listen to talk-show hosts and financial celebrities who also have not taken the time to learn about the products available today, yet they have been given a “stage” from which they spew their opinion all over highly impressionable consumers. Numbers 2, 3 and 4 on Suze Orman’s Investment Hate List involve life insurance. Rather than focusing on the many benefits of life insurance, Suze and other financial gurus choose to rant about how much money the insurance agent makes and how expensive the policies are, advising consumers to seek out the cheapest coverage possible. How often have you tried to cut corners only to end up with something that doesn’t last or doesn’t work at all? Probably more times than you and I care to admit!

Most consumers think of life insurance as “death” insurance. It’s true. If you own the old type of life insurance, you will have to die before anyone can benefit from your policy. Guess what? You don’t want the “old” type of life insurance. You need the “new” type of life insurance. Much like any other consumer product, Life Insurance has evolved through the years and several years ago the insurance industry found a way to make their products more flexible providing benefits while you are alive. How about that for product innovation?!

Below is a short list of how you might use one of these new life insurance policies:

Buy a home
Send a child to college
Pay medical bills
Generate income for Retirement
Pay Long-Term Care Expenses
Leave a legacy
Replace lost income due to a death
Avoid Income Tax

This list should make you sit up a little straighter. Did you notice anything as you read through the list? You might buy a home in your 30s but not have long-term care expenses until you are in your 70s or 80s. These new policies take you through all stages of life which is why it is so important to purchase life insurance as soon as possible. You know what they say, you can’t purchase homeowners’ insurance when your house is burning down. Same is true with life insurance. You can’t wait until you’re on your deathbed to purchase life insurance either.

Before I finish this post, let’s spend a minute on the #1 reason why people who know they need life insurance don’t own any; they think they can’t afford it. The cost will vary from one person to the next, but I am happy to report that this new life insurance product is priced like Term Insurance. Now, if you know anything about term insurance, you know that it is the cheapest insurance on the planet. The problem is that 98% of all term insurance policies expire worthless; you outlive the policy. Here’s the good news. You can now own a permanent life insurance policy that is priced like a term insurance policy and does the cool things in the short list above. Guys, you can’t afford not to have life insurance!

One final statistic before I go. Bank Owned Life Insurance (BOLI) continues to be a popular investment choice for a variety of banks. As of June 30, 2023, 3,153 banks nationwide reported cash surrender values on their regulatory filings. 64.6% of banks nationwide with assets between $100 million and $1 billion currently own BOLI. Wow! What do Banks know that Suze Orman doesn’t know?

Download the Life Insurance Needs Worksheet