During the summer of 1987, my senior year in high school, a classmate was killed by a stray bullet while resting in her home. This young lady was far from a thug. She was very bright and had already begun saving money for college. This was the height of the crack wars in Detroit and many other urban cities in America. Did her parents have a life insurance policy on her? Probably not.
Here’s a statistic for you…35 million US households are without life insurance. Of the 35 million households, 11 million of these households have children under the age of 18. These 35 million households represent one third of all households in America! Are you one of these households? Probably! Let’s get into some reasons for why you don’t have any insurance for your kids. First, deep down inside you believe that it’s bad luck to insure kids don’t you? Every time you thought about insuring you kid a thought crosses your mind about them dying young. Let me assure you that there is no correlation between pre-mature deaths and life insurance. Another excuse is cost. How much does it cost? I’m frequently asked. My response, “I’ve been able to get $100,000 of term life insurance for my clients’ children for as little as $10 per month”. This will cover them until they reach adulthood. Now, for just $10 per month you can prevent car washes, church dinners, bake sales, and having to ask relatives for the money for funeral costs.
Should you buy term insurance or permanent insurance for junior? First of all, let me provide a rather brief description of both because you have got to get back to work (but I do appreciate you taking the time to read my blog, though). Term (or temporary) insurance provides protection in the form of a monetary payment for a certain amount of time in case of a death. Permanent insurance provides a monetary payment for the life of the insured until they pass away. Unfortunately, with most permanent insurance policies, expenses tend to chew up the death benefit in later years when the insured needs the coverage the most. One has to know and understand the positives and negatives for the plan that they intend to purchase.
Here’s an argument for term. If you feel strongly about your child making their own decisions once they reach adulthood, then chose the temporary option which is a term policy. You can insure them for the first 20 years, and they can take on the responsibility afterwards. The argument for permanent insurance would be the savings option that comes along with a really good policy (be careful to read the fine print). This allows for a death benefit if the unthinkable should happen and a savings account for college or money for a down payment on a first home. In the end, you have to make your own decisions, but life insurance can be defined as monetary assurance in case the unthinkable happens. Why not be the one to make it 34,999,000 households without life insurance for their children instead 35,000,000. God bless!
Walter Hines
Financial Editor
ReelUrbanNews.com
“I blog; therefore, I am!”
Twitter Account: @bisonbiz2012
Email: walter@bisonbiz.com
