Last month as I was driving to the grocery store, about a mile up my road the police had
completely blocked it off. This may be a common thing in a place like New York City,
but in the suburban area of Johnston, Iowa, something bad had obviously happened. A
couple of hours later my 18-year-old son learned that one of his classmates and
basketball teammates had rolled his car off that road and he (Jok) was in the hospital.
The road was not a highway. On the contrary, it had a low speed limit without any
intersections, etc. So, we assumed that he would recover from whatever minor injuries
he had and be perfectly fine, possibly the next day.
The next day we woke up and my son said, “Jok died.” How he died and how he
crashed was irrelevant to us. It was shocking! Even though my son did not know him
very well, when an 18-year-old–who had just graduated high school and his life had just
begun–dies unexpectedly like that, it sends a shock wave through your heart. The
thought of any “kid” dying sends a shock wave through your heart. You all know the
feeling. Everybody said he was a great kid with a great family that is obviously
devastated.
As somebody who has spent 25 years in finance and insurance, outside of the sorrow
that I felt, you know my next tendency. My next tendency was to hope that the family
had the resources or had made the preparations to weather the expenses, time off
work, grief counseling, etc., that they will soon have to navigate.
Alas, as we all have seen many times, the GoFundMe page popped up a couple of days
later. My wife shared it with her friends on Facebook, and I asked her what the situation
was. Unfortunately, this situation was similar to many situations that you and I have
seen over the years. The family did not have $8,000 or so in cash to pay for the burial
services and they were seeking funds from family and friends to help cover the
expenses. $8,000 was the “goal” on the GoFundMe page. And again, as we have
seen over and over, there was no life insurance on this fine young man. I was,
however, pleased to see that the community was generous enough to indeed reach that
$8,000 goal.
There are better ways! As I sit here writing this article, I ran the numbers on a $50,000
life insurance policy for an 18-year-old healthy kid, and it is less than one dollar per day,
$344 per year. Again, that is for $50,000 in tax-free life insurance coverage, which
would go a long way toward covering many expenses in addition to the burial.
This is not a statement about this young man and his family, but a statement about the
public in general. Here is the great paradox. The paradox is that my son’s classmates
(and my son) all walk around with $200 basketball shoes, $800 apple headphones,
$1,000 iPhones, Nike “Elite” sports attire, etc., but yet many of them are uninsured.
Being uninsured is fine as long as the resources are there if–heaven forbid–tragedy
were to ever happen. However, you and I both know that the average American could
not financially handle an emergency needing $1,000, let alone $10k, $20k, $30k etc.
Expenses like this are financially catastrophic to many Americans. There are solutions
for helping with “catastrophic” situations like this.
Instead of $800 Apple headphones, why would parents not spend one dollar a day to
address the risk of this horrible possibility? Because in many consumers’/parents’
heads, the death of a child seems so unfathomable and so far out from realism. It is
just not a thought that ever enters their heads, because it is too uncomfortable. This is
why it is so important for you–the financial professionals–to do what you do. We all
need to tell stories like this and convince them that it is indeed a possibility, even if it
makes them uncomfortable. So, keep up the good fight. People need you.
On a bit of a technical note, when it comes to the carriers’ underwriting of life insurance
policies on the kids, it is a common practice that the carriers will require that the parents
have at least double the life insurance coverage on themselves for whatever dollar
amount of coverage they are getting on the children. For example, if I am getting
$50,000 in coverage on my son, I better have at least $100,000 in total coverage on
myself. The carriers have this stance because if the parents do not believe in life
insurance for themselves, then why get so much on the kids?
