When insurance is mentioned, the typical thought is usually home and auto insurance, but actually life and health insurance helps families the most. Insurance in the most basic form is a tool used to transfer some risk from one person to another.
If you look at home insurance, it’s transferring the cost of a house fire from the owner to the insurance company. That’s exactly what life and health insurance does, and I’ll tell you what — you are worth way more to your family than any home out there!
So if we ourselves are so valuable, why is it that we are the last things thought of when insurance comes up? People don’t talk about life insurance enough because it’s uncomfortable; it generally would mean that you or one of your loved ones are gone.
Unfortunately, everyone will have to deal with death at some point in life, and although it will be stressful and mentally tough, your finances can remain unharmed. This financial security may be the only thing keeping your family together through this very challenging part of life.
Let me give you an example: a new family is expecting a child, and they decide to have one parent work and one stay at home. The median income for a middle-class household in 2024 would be about $106,000 (Money.com, n.d.). So let’s say the worker in our example makes just that by himself. What you probably don’t know is that the stay-at-home parent’s equivalent value in 2024 is about $178,000 (Investopedia, n.d.). For the surviving parent to financially stay the same, he or she would need to earn $284,000.
Now what happens when something goes wrong AND YOU SURVIVE? Imagine you are just waking up, wondering where you are and why you don’t remember anything. This is where health insurance fits in, and no, I don’t necessarily mean your major medical that everyone talks about. There are many types of health policies that help a wide range of situations.
Do you know how high your odds are of losing a paycheck because of injury or illness? According to the Social Security Administration, a 20-year-old has a 1-in-4 chance of developing a disability before reaching retirement age. 1 in 4! Those odds are huge.
To give you a perspective, the average odds of being in a fatal car accident are about 1 in 93, and a house fire is about 1 in 1,236 but we think about that insurance first!? There are even policies that can help offset the cost of your major medical’s deductible in the event of something like a sports injury.
The best way to help guide your financial future is to have a well-planned insurance portfolio. Life and health insurance are just a few tools that can be used to build a custom plan for your family. Your local insurance agent can help you find the perfect policies to use to protect what’s important to you, but remember the better your insurance agent knows you and your family, the better you can be helped. Take time now to talk with a friend or family member and ask them to take action for their future self. If they are your kids or grandkids, you can do it with/for them and provide them with one of the best gifts they could receive.
Here are some helpful websites to get you started:
- IRS High Deductible: RP-2023-23 (irs.gov/pub/irs-drop/rp-23-23.pdf)
- Bankrate.com. Search: Bankrate’s Annual Emergency Fund Report
- Money.usnews.com. Search: Why Is the Middle Class Shrinking?
- Investopedia.com. Search: How Much Is a Homemaker Worth?
