Insuring What Could Happen and Ignoring What Will Happen
SBLI of Massachusetts
December 15, 2010
Chances are every homeowner you know has some form of homeowner’s insurance. Whether their policy covers their dwelling only or extends to their possessions, they have some sort of coverage that will help them replace their home should an act of nature, arson, or accident ruin the structure.
The same is probably true of automobile insurance. Many states require you to carry automobile insurance and lenders require it for both automobiles and homes because they want you to protect their financial interest.
Ironically, not everyone has life insurance coverage. Why is this ironic? Consider this:
Your home or car may be ruined or damaged someday as a result of an accident or act of nature. However, it is possible that you may pay for automobile insurance and homeowners insurance for decades and never, ever have a claim.
That is not the case with life insurance.
No matter what happens over the course of your life, chances are, you will experience the insurable event that triggers the payment of a death benefit of a life insurance policy. It is simply a question of when.
When you purchase term insurance, there is a chance your death may not happen during the term of the policy, but that doesn’t mean it is a waste of money. With a term life insurance policy, you likely can convert it to a whole life policy at the end of your term. That way you gain the benefit of years of a low cost premium and a comprehensive death benefit that can then be converted to a whole life policy once you have exhausted that term.*
It is important to hedge your financial risk for loss. After all, no one wants to have a fire ravage their home and then attempt to pay for the damage repair out of pocket. But it is just as important to plan for those events that you know will happen, even if you don’t know when, so your family is not left without the financial support they need to continue to live the lifestyle that you worked so hard to provide.
*Term to whole life conversion can only happen in certain circumstances. Please check with your agent or insurer to find out the details of conversion for your individual policy.