Life Insurance: An Emotional Purchase

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Few things in life are more daunting than facing our own mortality. There are the simple, unavoidable signs of aging: graying hair, an aching back or throbbing knee, a few more medications or medical checkups. Then, there are the more dramatic confrontations, like a car accident or a serious illness. As stressful as these encounters may be, a parent needs to keep a clear head when dealing with health issues, big or small. At some point, emotions must be kept in check as families determine how to handle a major “life after death” issue: life insurance.

Despite a wife and five children, John Richards admits that he never gave his life insurance policy much thought until relatively recently. A truck driver and farm owner from Gaylesville, Ala., Richards leads a very active lifestyle. A few weeks ago, Richards was riding 60 miles per hour on his four-wheel ATV when he hit a pothole and flipped over several times. After the fifth flip, the ATV landed on top of him. The result? A crushed collarbone, broken shoulder, three cracked ribs and a badly broken right arm.

It is uncomfortable for people to think about as they have to deal with the thought of their own death or the death of someone they love.

“I thought that death was for old people, not for people in their 20s, which we were when we bought the policy,” says Richards. “With my accident, I realized that I very easily might not have lived. I realized that I am not Superman.”

In addition to facing his injuries, Richards also took a look at the more practical issues that would face his family should anything more serious happen to him. “There are many things to do on the farm that someone would have to pay for: taking care of our 7-acre lawn, feeding the animals, cutting the hay,” he says. “A 36-acre farm needs constant work. After seeing the high medical bills for broken bones, I have realized that we need even more life insurance.”

Thinking Ahead

Sarah Clish from San Jose, Calif., is a certified financial planner with Ameriprise Financial Services, Inc. Helping families deal with their life insurance needs is an important, and often difficult, part of her job.

“It is uncomfortable for people to think about as they have to deal with the thought of their own death or the death of someone they love,” says Clish. “Some can’t face it head on and are therefore in denial: ‘It won’t happen to me.’ I have had several women break down into tears when thinking about their husband’s dying. Men don’t seem to have the same outward reaction, but it does faze them to think about their wife passing away.”

Life insurance needs vary depending on who is the primary breadwinner in the household. Traditionally, a husband is earning more in the workplace, but that is not always the case. Perhaps one parent is staying home to raise the children; in this case, the financial impact can be difficult to measure but is a crucial part of the overall economic picture. After all, childcare costs are a major financial commitment – what happens when there is only one parent, who will presumable have to continue working or re-join the workforce?

“The thing that is most critical is to get people to a point where they can think about the unthinkable and then envision what they want their lives to be like – take a year off, move away, spend more time with the children, change to a less-demanding career,” says Clish. “Whatever these things are, they need to articulate them to help shape their needs for life insurance. It is said that the purchase of life insurance is an emotionally-based purchase supported by the facts. A person must get in touch with what he feels inside before he sees the value associated with the purchase.”

Peace of Mind

Brian Kaplan is a public relations professional from New York, N.Y. Married with a 21-month-old son, Kaplan recently made a dramatic increase to his life insurance policy. His decision was based on the fact that his wife was unable to up her policy and that, as independent business owners, they both face an element of instability in their professional lives. “I see life insurance as having two benefits: immediate money for my wife and son in the event of my death and as a building investment for me and my family as I get older,” he says.

Kaplan is lucky enough to have a friend in the life insurance business who helped him make these important decisions and understand some of the nuances of the policies and plans. As a result of feedback from his friend, Kaplan has term life insurance that he plans to slowly convert to whole life insurance, which would allow him to lock in higher interest rates.

“While it’s not a subject anyone enjoys, it is a necessity in the event of death,” says Kaplan. “It’s certainly better than leaving your family without any money in a terrible time of grief. When my son was born, I made a concerted decision to substantially increase the policy by 500 percent. I more or less made the decision on my own because my wife was dealing with her own stress in the form of a new child, business to juggle and family health concerns. This is not the best policy to determine solo, but it was one that I felt strongly about at the time.”

Kaplan leads a healthy lifestyle and, fortunately for him, his family history does not include major health concerns like cancer, stroke and heart disease. Still, the need to protect his family was a major priority for him. “Having adequate life insurance definitely makes me feel like a better provider,” he says. “Obviously, there are the essentials of being there for your family on so many other emotional and physical levels, but this helps with my emotional mindset.”

Facing his own mortality was not a problem for Kaplan, but facing the mortality of a family member had a dramatic impact on his perspective. Despite being very healthy and having that healthy family history, Kaplan’s relative has battled brain cancer for two years. “Seeing someone who exercised frequently and rarely ate poorly develop this awful disease made me face many issues,” he says. “I certainly want to be around until my mid-80s, or while my health is still relatively strong, to watch my child mature and have a family of his own.”

Of course, a father cannot allow himself to become so fixated by the possibility of death that he forgets to enjoy life. Being there for your family is a crucial part of parenthood and extends beyond a parent’s individual lifespan. Kaplan’s overall philosophy is a simple one: “I have always felt that you can make yourself sick or drive yourself nuts by being so afraid of death,” he says. “So I just try to live life in moderation and take it day by day.”

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