There are some clients we only talk to every once in a while.
Then there are those that we see every month or so — to pay a bill, answer a question, whatever.
Noah didn’t wait until it started raining to build an ark. Insurance is no different — you can’t wait until you need it to get it.
J and her husband were ones we’ve seen a lot over past year or so. They came in to pay their bill in cash most months — a lot of times with their kids, including a newborn, in tow.
They also owned a business. She handled paperwork and he handled the manual labor.
She came in earlier this week and apologized for not coming by to pay the bill last week when it was due — there had been a family emergency.
“Family emergency” can cover a lot of ground so I hoped for the best.
It was the other kind of family emergency.
Her 27-year-old husband had been drinking, then grabbed his stomach and fell over.
He’d been in the hospital, unresponsive, all weekend.
They still didn’t even know what was wrong with him.
I can’t blame her for the question she asked as she held back tears.
Was there any way we could get the life insurance on him that she and I had been talking about since she first became our client?
Like I said, this one was painful.
You can’t get insurance — home insurance, auto insurance, business insurance — after you need it. You have to get it in place beforehand.
Life insurance is no different.
That’s a conversation I never want to have again. So please, if you don’t have life insurance right now, call someone.
If you are visiting me right now, there’s a decent chance it’s because of the radio ad we have with John Kimmons and The Bull.
Welcome.
John told me about his brother-in-law the first time we met. As tragic as it is to lose someone, the story had as happy of an ending as possible. His family had enough money to continue living their lives.
John’s coworker wasn’t as lucky.
I’ve talked about life insurance a lot on this blog, but the point is this: If there is someone who relies on you, you need life insurance.
It won’t replace the gaping hole in their life that your death would leave, but it does take a huge weight off their shoulders at a time that their entire world has just collapsed.
Give me a call at (417) 708 9583. I’d love to sit down and talk about what options may be right for you and your family.
I like this little ditty so much I want to hang it on my wall and protect my babies with it. Oh, wait. I did.
This is actually my second-favorite life insurance one-liner.
Our job is to ask you about life insurance. Please don’t make it our job to tell your family you didn’t have any.
Good life insurance agents have a whole arsenal of these little ditties, just waiting for the opportunity to smash through a reluctant buyer’s objections.
They’re usually designed to make people think about those left who are left behind when/if that person dies.
That’s the whole point of life insurance, after all. To protect the people left behind.
“If every wife knew what every widow knows, no one would go without life insurance.”
Do we lie in wait, just hoping to make a quick buck off an emotional buyer?
No, most of us truly believe in the truth lying behind the gutshots to the feels.
“You just died. Your family will be here in 15 minutes. What do you want me to tell them?”
I’ve mentioned it before, life insurance is the most important thing I offer. Losing your home and belongings or your car hurts and hurts bad.
I’ve seen tragic stories. Gofundme accounts have been set up for folks who lost everything they owned in a house fire, people who had a stroke, families who just lost their father and sole provider and more.
The infuriating thing is that insurance exists — the entire reason I have a job — is to prevent tragedies like these from devastating the rest of your life. And insurance does it faster and better than begging your friends and family to beg their friends and family.
Lose everything in a house fire? Good home insurance would have rebuilt your house, replaced your possessions and found you a place to live while your home was being rebuilt.
Impossibly high medical bills? That’s why medical insurance exists. A $6,000 deductible is rough, but it’s nowhere near as rough as a $200,000 hospital bill.
You have no idea how heart-breakingly frustrating it is to see a family lose their home because dad died in a car accident and know that life insurance could have saved that home, paid the bills and put the kids through college.
Yes, insurance can be expensive, I’m not going to try to tell you otherwise.
But it’s no where near as expensive as not having it.
But there are four disasters that are not going to be covered unless you specifically add them.
You think it’s dreary with day after day of rain? Wait until that rain starts coming in a house without flood insurance. photo credit: Decatur FD Flood via photopin(license)
1) Flood. That’s the one that’s on everyone’s mind right now, for stuff like this and this.
Flood insurance is handled by the National Flood Insurance Program and it’s a separate policy from your regular homeowners insurance.
If you live in a 100-year flood plain, your mortgage holder will require you to buy flood insurance (and they’ll notify you of the requirement before they give you a mortgage).
As side note, a “100-year flood plain” does not mean the area’s going to flood once a century. It’s shorthand for an area that has a 1 percent or greater chance of flooding in any given year. In other words, there’s a 26 percent chance of flooding during a 30-year mortgage.
I’ve seen places on a 50-year flood plain — which means there’s a 2 percent chance of flooding in any year — flood twice in five years.
But even folks who aren’t on a flood plain need insurance: According to the NFIP, 20 percent to 25 percent of all flood claims come from low-risk areas.
2) Sinkholes. What could be worse than the ground opening up to swallow everything you own? Finding out that most home insurance policies exclude “earth movement.”
That’s kind of a big deal for those of us here in Missouri. There’s a reason the Show Me State is also known as the Cave State. See, here’s one. And all the recent rain is making them even more threatening, like this one.
There aren’t many insurance companies that will help you here. I know of two and although Farmers isn’t one, Foremost (one of the companies we work with) is. If you’re worried about a sinkhole, you may be better off with the Missouri FAIR Plan’s standalone policy for sinkholes, similar to what the National Flood Insurance Program’s flood insurance.
Most Missourians have heard of the more recent 1811-1812 flurry of quakes that were in the range of magnitude 7-8 and centered near New Madrid, Missouri. Because few people lived in Missouri in the early 1800s, impact to human life was minimal. The three major earthquakes in late 1811 and early 1812, however, did permanently change the course of the Mississippi River and created the Reelfoot Lake in the northwest corner of Tennessee.
Yeah, the largest earthquake in the country happened over on the east side of the state. Not a whole lot of people in Missouri two hundred years ago, so no biggie.
Any idea of what it would do now?
Out of the four big gaps in your home insurance coverage, earthquake is typically the easiest to fix. You just tell your agent you want to add an earthquake endorsement. It doesn’t add much to your premium — typically somewhere between $35 and $100 a year. However, the deductible is usually between 5 percent and 25 percent of your home’s value.
And in case you’re wondering, the earthquake endorsement only covers earthquakes, not sinkholes.
Yes, I’m totally just looking for a reason the show you a picture of my kids & grandkids. Aren’t they adorable? These are some of the people who will be emotionally devastated by my death. But life insurance will make sure they won’t feel it financially.
4. The death of a breadwinner.
This is the one that should be keeping you awake at night if you don’t have a policy in place to protect your family.
We like to think about our home being our biggest asset, but it’s not. Our biggest asset is our ability to earn money. If you’re not there to earn that money, what happens to the house? What happens to the people inside it?
The turning point for me came when I had to fill out a health insurance application about four years ago.
Nonsmokers got better rates, therefore I became a nonsmoker.
And if I had it there, in a contract, I was going to stick to it.
Somehow the cost per pack didn’t faze me as much as the increased cost of my health insurance.
So I understand the problem. Many smokers — especially young smokers — feel fine and enjoy smoking. They can quit any time they want to. The near-certainty of future health consequences loses out to the immediate gratification of taking a drag. And the ones that don’t feel fine figure it’s too late to quit anyway.
I’m using smoking as shorthand for all nicotine users. It’s killing you, regardless of whether you smoke it, chew it or inhale it in a vapor. Image courtesy of Mister GC at FreeDigitalPhotos.net
I was in the same trap. I’d quit later, I just didn’t feel like it yet. It wasn’t until I was going to get hit with an immediate consequence that I decided to finally and permanently quit.
So just in case you need another reason to quit, I’ve got some numbers to throw at you.
And I want you to weigh those numbers against the price of protecting your family.
The first number is the obvious one. How much are you paying for cigarettes?
Missouri is one of the cheapest states to buy smokes and it’s still $5 a pack.
At half a pack a day, that’s $75 a month.
I can get most folks — even smokers — a pretty good life insurance policy for $75 a month.
If you’re smoking a pack a day, that’s $150 a month. Depending on how old you are, we can get you an amazing policy for $150 a month. The kind that helps pay for things while you’re still alive.
Just for fun, here are some more numbers. This is how much it would cost to start a $250,000 10-year term life insurance policy for a woman throughout her lifetime, assuming she’s in average health. (BTW, I sell life insurance through Farmers, so those are the numbers I’m using here.)
A smoker is paying almost double the rate of the nonsmoker.
Why? Because she’s almost twice as likely to use the life insurance (the technical term here is “dying”).
And as she gets older, the smoking woman is more likely to develop health issues that make it harder to get life insurance.
I had a couple in my office earlier this week tell me that protecting their family was less important than their nicotine fix.
No, they didn’t actually say that. They said they couldn’t afford life insurance, but they were spending about $60 a week on cigarettes.
$60 a week? Did I hear that right?
Both the husband and wife smoke, so that’s a little less than a pack a day for each.
He probably didn’t actually say this. But it’s still a good quote.
And no, I don’t want you to wait until you quit smoking to get life insurance. Remember, the noxious weed makes it almost twice as likely that you’re going to die, so you really do need it now.
I want you to get life insurance and quit smoking. Pay for the life insurance with the money you’d set aside for cigarettes. Once you’ve quit for a year. Really and truly quit, call me again. We can send in a nicotine questionnaire and it will reduce your life insurance premium.
Then you have life insurance and money in your pocket.
And yes, I know it’s not easy to quit smoking. Even four years later, I still have cravings — I used to be a newspaper reporter and editor. A cigarette was my excuse to to go outside and gather my thoughts before I wrote or edited. So, of course, the cravings are worse when I’m writing. (Now, for instance.)
A 71-year-old client called me a couple of days ago to talk about life insurance.
He and his wife are refinancing their house and he wasn’t sure they’d make it to see the end of the 30 years.
He and his wife are the second and third 65+ clients who wanted to talk about life insurance in the past month.
Life insurance is almost always a great idea, but we would have had a lot more options if we’d had these conversations 20 or even 10 years ago.
Let’s take a look at what would happen if you had $250 a month to spend on life insurance — it seems like a lot of money, but let’s see how much coverage you get for that money.
Similar to For the best value, get life insurance when you’re young, I’m just using premium estimates for Farmers life insurance and a non-smoker in average health, but the numbers are going to be similar regardless of where you look. And age isn’t the only consideration, but it is a large factor in answering our question, “how much life insurance can I buy?”
For a 21-year-old, $250 a month buys a crazy amount of insurance. He’d be able to get almost $4.3 million with a 10-year term (blue line). Why? Because most people live past their 31st birthday. (Even it’s a 10-year term, get life insurance when you’re young — your older self will thank you for it.
If he pays $250 for a 20-year term (red line), he’s going to get $2.1 million. With a 30-year term (orange line) he’s going to get almost $1.9 million. Again, most people live past their 51st birthday.
The green line is the line for whole life insurance. It’s dwarfed by the term policies, but $420,000 is still a whole lot of money to leave your family.
It’s not really fair to compare a whole life policy to a term policy in a chart like this — permanent policies have a lot more benefits than this chart shows — but I want to show how options dwindle as people get older.
Our hypothetical wage-earner doesn’t get as much when he’s 40, but he’s still getting a whole lot of bang for his buck. Almost $2.4 million for a 10-year term and $193,000 in whole life.
He can still get a 30-year-term life insurance when he’s 50. But he can’t at age 51 — from an insurance company’s point of view, there’s too much risk that he’s going to die before he turns 81.
The 20-year term is still an option at age 60, but not at 61.
At 70, a 10-year term is still an option, just not for the $250 a month we said we wanted to spend. A $150,000 10-year term on a 70-year-old is just under $400 a month.
That green line is still hanging around, though. Our hypothetical man can still get life insurance up to age 80, but by this time we’ve moved out of the realm of taking care of his family and into having enough money for burial expenses.
I’ve said it before, life insurance is an emotional decision, for you and the ones you’re leaving behind.
But let’s take a look at some cold, hard numbers for just a couple of minutes.
Let’s look at life insurance and the timing as an investment. How much does it cost versus how much does your family get when you die? Are you better off waiting to buy life insurance?
The above chart shows the rate of return on term life insurance policies for a man at three different points in his life.
(These estimates are all with Farmers New World Life, but it’s going to be a similar picture for whatever company you decide to go with).
The blue line is the rate of return for the man buying a $150,000, 30-year term policy when he’s 45 years old. So if he buys it and dies the next day, he would have spent about $100 (a single premium payment) and his family will receive $150,000 for return on investment of $149,900.
If he dies at the age of 75, he will have spent about $33,000 on life insurance and his family will receive $150,000 for a return on investment of $116,000 — a pretty nice chunk of change and a lot better ROI than anything you’ll get in the stock market.
The red line shows what would happen if the same man waited until he was 55 before he bought a $150,000 policy. Since he’s 10 years older, he can’t get a 30-year term anymore, so he buys a 20-year term that will take him to age 75.
At first glance, the return looks better, especially at first. If he dies at 56 he’ll have only spent $1,600 for the $150,000 payoff. Meanwhile the 45-year-old sucker has paid an extra $10,000 for those 10 years of coverage.
But there are some rather large caveats here: 1) It assumes he didn’t die in a car accident at age 50, in which case his family would have absolutely bubkis. 2) It also assumes he didn’t develop cancer. Or diabetes. Or high blood pressure. Or asthma. Or any number of other ailments that would make it more expensive or impossible to buy life insurance at age 55.
In addition, the better rate of return flattens out rather quickly. At age 55, the difference is $10,000. At age 75, the difference is barely $1,000.
The 65-year-old version of our example is in orange. If he dies at 66, he’s saved $16,000 over the 55-year-old version and a whopping $21,000 over the 45-year-old version.
But now he’s had an extra 20 years to die in a fiery collision or develop medical issues. He could save that $21,000, or he could spend it to make sure his family is taken care of.
Again, the better return drops to about $11,000 when he reaches age 75.
That’s a whole lot of risk to save $11,000 on a $150,000 payoff.
Please don’t think this is an excuse to not buy life insurance because you’re “too old.” In fact, the whole reason I got to thinking about it is because I have a 69-year-old client who wanted to make sure his wife was taken care of after he died.
I’ve just heard the “I’m too young for life insurance” or, “It’s OK if I wait for life insurance,” excuses a lot.
I have some more charts that talk about whole life later. Questions? Shoot me an email at dgragg@farmersagent.com
Even thinking about life insurance can be more than a little frightening.
It’s an emotional decision: You’re admitting your own mortality. (Yeah, sorry Sunshine. You’re going to die. I hope it’s after a long and happy life. But the Angel of Death is standing by.)
Everyone knows it. Believing it is a different story.
It’s also a financial decision: Should you spend money on this? You have other bills to pay.
But what would happen to your family if something happened to you? If money’s tight now, imagine what would happen if you died in a car accident on the way to work. Would they be able to stay in your home? Would they have to rely on help from family members to pay the bills?
Full disclosure here: Insurance — including life insurance — wasn’t something I’d thought about before I became an insurance agent. I had what I could get through work and figured my wife would figure it out after that.
What I had through work was about a year’s salary. My family’s kinda counting on me to be around and pay the bills for longer than that.
My wife is an amazing woman. But I was — and still am — the one paying most of the bills. If something had happened to me, she would have had to deal with the loss of a husband, father and wage-earner all in one fell swoop.
And I really should have known better. I was a newspaper reporter and editor in my former life. Bad things happening to other people was a good chunk of my job: We reported on auto accidents, illnesses, fire, crime and a host of misfortunes on a weekly if not daily basis. A lot of these people had done nothing wrong. They were just in the wrong place at the wrong time.
All too often, the stories would end with, “The family is collecting donations to pay for expenses.”
That’s not something I want to leave my family to deal with. How about you?
But let’s look at it another way.
Let’s assume you make $30,000 a year.
You have insurance on your car. Let’s assume that it’s a $20,000 car. That’s nine months worth of salary.
You have insurance on your home. Let’s figure that at $150,000. That’s five years worth of salary.
Life insurance is insurance on your income. Let’s just figure 10 years worth of income, even if you never get a raise, that’s $300,000.
And you don’t have insurance on it?
Talk to someone about life insurance. It’s a big decision, so make sure you know what your options are. I happen to know a guy, but talk to someone.
The world as I see it 