Why You May Want to Have Life Insurance on the Day You Die

Having been in the life insurance business for over twenty years, I have heard all kinds of reasons of why the life insurance I’m proposing will only be needed for a finite period of time, usually until the kids are educated and/or the mortgage is paid off. The following story illustrates why you may want to make sure that at least some your insurance is in effect the day you die.

I knew a man who was a typical member of the “greatest generation.” After serving in WWII, he married and started a family and a business. As the US economy recovered after the war, it lifted his business and he was able to build a house for his growing family. He lived to see his four children marry, and seemed at his absolute happiest when he was able to walk each of his two daughters down the aisle. Although he lived to see six grandchildren born, he died at the relatively young age of sixty-six. And while his widow was emotionally devastated to lose her life mate of forty years, she was not financially devastated. You see, he had planned ahead.

Although he was still working when he died, his youngest daughter had just married two years prior, and his mortgage was just recently paid off. That obviously didn’t leave much time to accumulate a significant retirement nest egg. (That isn’t dissimilar to many of us who got married in our late twenties and started a family in our early thirties.)

Because of his foresight, his widow, who is still alive today at age eighty-eight, has never missed giving any one of her now eleven grandchildren (and three great-grandchildren!) a birthday present or a Christmas present. She was able to stay in their house for fourteen years after he died and finally left, not for financial reasons, but because she decided it was time.

To this day, more than twenty-one years after his death, she still speaks in glowing terms of her beloved, often getting teary-eyed as she reminisces about their life together. But would she have felt the same way if he hadn’t provided for her in the same manner? Isn’t it possible that she might feel a twinge of resentment if she had to impose on her children for financial support? If she wasn’t able to give her grandchildren birthday gifts?

All of her children would have gladly taken her in if necessary. But what would that have done to her feeling of independence? I can see now, as she starts to give up driving, that she hates the fact that she must depend on others to help her out. How would she have felt if she had lost her independence much earlier, and not for health reasons, but for financial reasons? How would that have impacted her memory of her husband?

While term insurance can cover the exigencies of a premature death, in all likelihood, it won’t be in effect on the day you die (industry statistics show that less than 2% of all death claims are paid on term policies). That is why you may want to consider making at least a portion of your insurance portfolio permanent.

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Note: This essay was written in 2005. The widow has since passed away.