Why You Shouldn't Buy Life Insurance on Impulse

Becky Holiday | Mar 22, 2021 | minute read

life insurance policy

A pandemic is something most of us never thought we’d see in our lifetime, yet here we are on the other side of the COVID-19 outbreak. Luckily, with the rollout of vaccines, we are seeing a light at the end of the tunnel. The coronavirus not only affected the physical health of millions of people during 2020, it also affected many of us emotionally, causing a shift in our way of thinking and buying habits.

The pandemic raised fears in all of us. Fear of losing a job and income to support our families. Fear of getting sick ourselves or seeing our loved ones get sick or possibly die. Fear from not being able to see family or friends for months and months. And the list goes on. All of us have tried to protect and comfort ourselves in one way or another during the pandemic. For some, retail therapy has provided a bit of joy, even if cash is tight. In fact, impulse purchases have increased 20-30% both in-store an online during the pandemic, meaning many people are adding a variety of items to their shopping cart with little-to-no planning or thought.

Sure, grabbing a candy bar or tabloid magazine while standing in the grocery checkout line gives us some joy. And, adding a matching accessory that pops up during the checkout process when you’re spoiling yourself with an online clothing purchase can provide a bit of relief from the daily stress caused by the coronavirus. But, impulse buys aren’t recommended in a lot of cases, and life insurance is one of them

Buying Life Insurance Requires Analysis and Consideration

The COVID-19 pandemic has had many people facing their mortality and has resulted in some of these folks “panic buying” life insurance. While it’s good to recognize the need for life insurance to take care of your loved ones after you’re gone, there are many things to consider and evaluate before you make this important purchase. The coronavirus shouldn’t be the determining factor for buying life insurance.

Life insurance is meant to protect your loved ones should something happen to you that will impact all of your remaining income-earning years and beyond, not just the next six months, or until the coronavirus no longer poses a threat. That said, there are a variety of things to take into consideration when determining the amount of coverage you’ll need.

Life Insurance Needs Analysis

Who Should You Buy Life Insurance From?

When deciding to purchase life insurance, it’s advisable to work with an independent insurance broker rather that a direct writer. A broker works for you, not one insurance company, like the direct writer does. This allows the broker to shop a variety of different insurance carriers to find the best policy and coverage to meet your needs. You can think of the insurance broker as a personal shopper for your life insurance.

How Much Life Insurance Do You Need?

The amount of life insurance coverage you need can vary depending on how old you are, how many dependents you have, and what kind of lifestyle you want your loved ones to have after you’re gone. Additionally, your life insurance needs can change over time. For instance if you take out a term policy while in your 20s before getting married or having children, your needs will be different than taking out a policy in your 40s when you are married and have children starting college. Then, your needs can change again in your 50s once your children are married and having kids of their own.

life insurance planning

Assessing Your Needs

An experienced insurance broker can help you assess your life insurance needs. The process begins with determining how much annual income your family would need to have replaced should something happen to you, and how many years they would need this income. Next, expenses are estimated. These include funeral costs, mortgage payments, college tuition, and the calculated value of all you do in and around your household. This includes yardwork, childcare, cooking, housekeeping, and more. It may seem odd to incorporate these household needs into your family’s financial needs; however, if you’re not there to do these things, they may need to hire someone to help get it done.

Once you determine the amount of income your family will need, deduct it from savings, cash assets, and other life insurance coverage you may already have – possibly from a group employer policy – to get the balance of coverage you need to cover.

It Might Take Some Negotiating with Yourself

Replacing annual income for 5, 10, 20 or more years, plus mortgages and college tuition can add up to hundreds of thousands – or even millions – of dollars very quickly. The premiums to cover a policy of that size quite simply may not be affordable. It’s upsetting to think you may not be able to provide fully for your loved ones should you pass away, but it may be necessary to prioritize their expenses and have a policy written that will cover their basic needs at a premium that you can afford.

Leap | Carpenter | Kemps Insurance Agency Can Help

At Leap | Carpenter | Kemps Insurance Agency, our life insurance agents can help you through the process of determining the coverage you need and want, and shopping a variety of insurance providers to find the best policy to meet your needs. We know that navigating the course to purchase life insurance can be challenging, but we’re here for you and can answer any questions you may have. Contact one of our knowledgeable agents today.

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