Before You Need It

The recent death of Ray Liotta in late May of this year brought about great discussion in the insurance industry. Why? His death was unexpected on many levels. He was at the peak of his career, at the age of 67.  He considered himself healthy and had plans for the future. Then on May 26th, he passed away in his sleep unexpectedly.

​He was quoted as saying “For some reason, I’ve been busier this year than all the years that I’ve been doing this. And I still feel I’m not done yet. I just think there’s a lot more.” 

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With life expectancy being 78 for men and 81 for women in the U.S., along with the growing number of people living past 100, Liotta had a reason to believe he still had plenty of time. According to Pew Research, the number of people to live to 100 and beyond will grow eightfold by 2050. That’s only 28 years away! 

Part of the reason I am so passionate about helping clients prepare for life’s unexpected is exactly what Liotta’s death symbolizes. It was unexpected, as is the case for most people. Even when someone becomes terminally ill and there appears to be a little more time to get affairs in order, one should always be thinking, “If something were to happen to me tomorrow, would my family be provided for and financially covered?”

4 Misguided Reasons About Insurance

1. I am too young: According to an article by Motley Fool, in a study conducted by Consumer Affairs, 25% claimed they didn’t have life insurance because they considered themselves too young and not in need of it. However, by the time most people reach their 30s and 40s, they are more likely to have family that depend upon them. If something were to happen to you, would your family be taken care of? It is a lot more affordable and easier to get reasonable rates on insurance premiums when you are young, and becomes increasingly more costly as you get older, especially if health also becomes an issue. 
2. I am healthy: As I alluded to in reason #1, while you may feel healthy now, if you wait until you get a diagnosis of some kind to then decide you need a life insurance policy, it may be too late, especially if the condition you are diagnosed with makes you uninsurable. According to Money Under 30, the key reasons you may be declined for life insurance include physical health, mental health, lifestyle choices, occupation, credit worthiness, criminal record, driving record, and then age. 
3. I don’t need it: Let’s say you are financially secure with plenty of money in the bank, a retirement plan you are contributing to, and have calculated that all of this will cover taking care of your beneficiaries should something unexpected happen to you. Are you considering the tax implications? Annuities paid out will be taxed to your beneficiaries just like they would to you cashing out. Stock left to beneficiaries once cashed in will also be taxable. However, life insurance would not be taxable, and therefore is a good idea to offset the possible tax implications of your distributions that will create tax burden. Read my blog, Transferring Wealth Tsunami, to learn more about this. 
4. It won’t happen to me: When it comes to disability or long-term care insurance, it is easy for people to put these two things off, especially if they are younger or consider themselves quite healthy. According to Benefit News, the causes for long-term disability claims are cancer, back disorders, injury, cardiovascular disorders, and joint disorders. Top causes for short-term disability claims are pregnancy, non-work-related injuries, joint disorders, digestive disorders, and cancer as well. When you look at that list, age has nothing to do with most of these causes. It is more about lifestyle and activity choices, occupation, and then family medical history. 

Just like banks are most likely to loan you money when you don’t need it, the same can be said for insurance companies. Insurance is meant to be a future-focused investment for peace of mind and security. If you wait until you actually need it, it may be too late. 

For Your Future,

Lori Capozza Zeind
www.lczconsulting.com

P.S. If this blog got you thinking and you want to know how to calculate what you may need if something should happen to you, CLICK HERE to read my February blog on Needs & Desires Analysis, with links to several calculators.