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Monday, June 17, 2024

Life insurance more than just another bill

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No one taught Niesha Neal about life insurance. Her family didn’t have it, and when she became an adult she didn’t see any reason to get any herself. Neal came to regret this decision when doctors diagnosed her with stage 3 chronic kidney disease in 2013 and stage 5 chronic kidney disease in 2016.

Neal worried about her medical bills and how her family would pay for her burial if she died. She launched the GoFundMe and Facebook campaign “Kidney for Niesha” to raise funds. While she has managed to raise some money, it pales in comparison to the security she would have if she had life insurance. 

“Now that I am in the situation that I’m in with my health, I have reached out to life insurance companies,” Neal said. “Because I have an end stage disease that is expected to end in death, I cannot find a company that will cover me.”

Neal is not alone. A study from Foresters Financial shows 41% of Americans own no form of life insurance. September is Life Insurance Awareness Month. Life insurance is easy to put off, but it’s essential for young and old alike as it helps you prepare for tragedies and unexpected expenses.

“It’s a product everyone needs no matter their age,” Cliff Johnson, principle agent at the independent insurance company CJi Agency, said. “I’ve personally had friends who have passed early without life insurance, and we had to pitch in to bury them.”

Dying is expensive. The National Funeral Directors Association estimates the average funeral costs families $7,360, and the National Bureau of Economic Research estimates other end of life costs such as medical expenses average to $11,618. Life insurance payouts often cover these costs in full. Quentin Beverly, a customer at CJi Agency, said life insurance makes him feel relieved because his family won’t have to pay those costs, and they will have extra money for the future.

“When my mom passed she had life insurance,” Beverly said. “It was an opportunity to leave a legacy. She left my first daughter a little something to go to school off of.”

Some policies can do more than pay families when a loved one dies. Johnson said some policies called whole life plans allow holders to cash out before death to pay medical bills and resolve other final affairs. Some policies also build in value over time and allow healthy customers to cash out or borrow from the plan, which can help with other expenses such as car payments.

However, whole life plans are more expensive, and for many low-income families life insurance can feel like one of many bills. Johnson recommends low-income families use a term life insurance plan, which is less expensive, so they are still prepared for unexpected tragedy. A term plan offers fewer options than a whole life plan and usually only pays upon the policy holder’s death.

Johnson said a term life insurance plan for a healthy 30-year-old should cost around $5 a month, while a whole life plan for that same person could be around $80 a month. Finding what plan is best for you involves meeting with multiple agents and discussing different plans.

“In an ideal world, you want as robust of a policy as you can afford,” Johnson said. “If you can’t afford it, then get what you can afford because there is nothing worse than getting a life insurance policy you can’t make a payment on and it lapses. That doesn’t help anyone.”

Johnson said it’s important to find a plan while young. He bought polices for his children after they were born. The earlier people find a policy the cheaper it typically is. In addition, finding insurance earlier helps avoid situations like Neal’s where agencies don’t offer affordable insurance because of a potentially fatal medical condition. 

“Life insurance is vital,” Neal said. “I cannot express that enough. … There are so many GoFundMes where people are looking to bury their loved ones. We can use GoFundMe, but if we already have life insurance in place, we won’t have to run to GoFundMe each time a loved one dies.”

Contact staff writer Ben Lashar at 317-762-7848. Follow him on Twitter @BenjaminLashar.

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