Why Young Professionals Should Purchase Life Insurance
I’ve delayed writing this piece on life insurance planning because to be blunt, I don’t love writing. As I thought more about the article, I made the decision to “get it done” because of the commitment I made to our team to do so. They count on me and me on them to do the things we say we will do. We cannot be afraid to do what is necessary for the team’s sake. Even when it is inconvenient or costly, keeping my word is an important part of who I am. I share this with you because life insurance planning has many similarities.
Each day, I have the privilege of working with many thoughtful, unique people and companies. Our team designs insurance plans that support an efficient and effective business transfer from one generation to the next and we provide structure for ideas that help successful organizations retain their great employees. Additionally, we have the honor of working with individuals and families who simply want to protect and provide for their loved ones in case they pass unexpectedly.
I believe in strategic life insurance planning and have witnessed firsthand what the coverage can mean to a family or business when a loss happens. But at the end of the day, none of my clients wake up and get excited to complete their life insurance planning assignment. They know it’s important, but I don’t kid myself into thinking that they get excited about it.
So why would they do it? They do it out of a sense of obligation, commitment and, most of the time, out of a deep love for those around them—likely the ones who would be most affected by their death. As a mentor of mine says frequently, “Do you know who buys life insurance? Someone who cares about someone else.” There is a wonderful, simple truth in that short sentence. The point is: Why buy life insurance? Because as a parent, spouse or business owner, we accept a financial responsibility for our families, our companies and our employees. We have made a pledge to do the things necessary to provide for them no matter the uncomfortable and unforeseen circumstances. I believe deep down, we all want to be the kind of people that honor our commitments and “do what we say we will do.”
Traditionally, many companies and consumers think about life insurance as something that’s acquired later in life as people traditionally consider their legacy…the kids, grandkids, a charity or caring for a spouse are front and center. Although the “right” time to consider life insurance varies depending on the situation, there is always a “wrong” time (and by then it’s usually too late).
I regularly encourage our younger clients (those falling between “college” and “retirement”) to engage in a strategic conversation about life insurance. Young people need insurance to protect their family from a sudden and permanent loss of their earned income, to pay off debt (house, consumer, unsubsidized student loans, etc.) and to provide for future college expenses or other important objectives that require financial stability. I had a close friend who passed recently that set aside money specifically so he could buy his four-year-old daughter her first car when she turns 16, even if he couldn’t be there to physically do it himself.
Our team at Rose Street consistently advises younger clients to “lock-in” their insurability with a quality insurance carrier and not wait for the “perfect” time to go through the underwriting process. It is true that we don’t get any younger and almost always true that we don’t get any healthier as we age (normally just the opposite). Additionally, we have clients that are already thinking about a tax-efficient retirement income and choose to use a life insurance policy as a vehicle to accumulate tax-deferred funds used in the future as a complement to other retirement funding sources.
Whether you buy term or permanent life insurance, I challenge you to have the uncomfortable discussion about your most important commitments because I am confident you are a person “who cares about somebody else.”