Death Assurance

Life insurance should be called death insurance, I say, because to reap its benefits you must first die. But I haven't found an insurance agent who agrees with me.

"It is meant for those who are living," said Ken West, an agent with American Family Insurance in Hobart.

True, it's meant for surviving loved ones of a deceased person, not for the person who purchased the policy while alive. This is why life insurance is also not called life assurance. It's all based on death, in my eyes.

Nevertheless, it can provide peace of mind to the buyer in regard to the future lives of the existing beneficiaries.

How much do you love your beneficiaries? Is your love for them worth $100,000? Or $250,000? On a similar note, do you love them enough to quit smoking? Or to quit other unhealthy habits such as overeating, alcoholism or a sedentary lifestyle, which may shorten your life or abruptly end it?

I ponder such crucial decisions each time I consider how much life insurance to buy. Or if I should buy it at all. Like West said, it's not for me. It's for my loved ones, depending who I select as a beneficiary.

Several factors go into my decision-making process. Who would need financial help the most after my death? Who wouldn't need it? Will their age matter, either being too young to badly need it or too old to fully use it? And would they really receive the amount of money I was told they would? (I'm not trusting of all insurance agents.)

I conducted a poll of my social media readers and found they are not only divided by having life insurance or not, but also about trusting it or not. Some called it a scam. Insurance agents hear this, too.

"When you pass away, not if you pass away, is the reality of life insurance," said Jeremy Yancey, an Allstate insurance agent in Merrillville. "It is designed to give your loved ones the ability to stay in your home and pay your child's college tuition."

"There are some people in the minority who believe there is no need for life insurance," he said. "To them I say, 'Do you want to leave your loved ones something in a will, or holding the bill for the expenses in your life?'"

I pay a nominal monthly fee for my life insurance policy through my employer. The tricky part is how much supplemental life insurance to tack on to it, which only becomes meaningful if I die.

"And if you lose your job? Or if they drop that benefit? Then what?" West asked me.

Yes, I should have additional life insurance but my annual mantra has been, "I don't think I'm going to die this year." And 2018 is no different.

Of course, I have no idea when I'll die, but odds are that I won't die this year. I'll be (only?) 56, I'm in decent health (I don't drink booze, I don't smoke, and I exercise regularly) and I have no plans to do any dangerous living (besides my poor eating habits).

This may all sound comical to you, but I'm deadly serious (pun intended). This is how I've been determining how much life insurance to buy, or if I should buy any at all, which I didn't consider in my younger days. My mindset has since changed.

It's all a gamble, a risk, a game of existential guesswork, this racket called life insurance. Especially term life insurance. It's essentially renting a policy, not owning anything, with hopes of not having to file a claim.

"The nice thing about life insurance is it creates an immediate estate overnight," West said. "But it is all based on your health and wellbeing."

I learned this last month while choosing the best policy for my fiancee, who's 47. We deliberated over different policies, monthly premiums and death benefits (Is that the ultimate oxymoron or what?). My most pressing thought was that she, like me, will likely not die this year. Or, in her case, not next year or 10 years from now, or even 20 years from now.

I'm basing this guesswork on her genetics, her lifestyle habits and statistical odds. One of the primary factors is that she, like me, doesn't smoke cigarettes or use nicotine products in any way.

"The rates are pretty high for those who smoke," West said. "Plus, this is for any nicotine use – smoking, chewing dip, the nicotine patch, or even cigars for that person who enjoys a cigar every once on a while."

My fiancee learned that her policy, through another insurance provider, would be significantly higher if she was a smoker. For this column, I asked West to prepare a life insurance policy estimate for me, and an additional estimate if I was a smoker.

For a "non-nicotine standard class" policy with a death benefit of $150,000, my monthly premium would be $495, which I think is ridiculously high. But if I was a smoker, it would be even higher, $605.

Tobacco users are more likely to die at an earlier age, so insurers would have to pay out earlier. The higher premiums even things out. Makes sense to me.

My father sold life insurance for different firms so my childhood was filled with talk about term life and permanent life. He often joked about being worth more dead than alive.

"It never ceases to amaze me, after 35 years of selling life insurance, the number of people who don't buy it," West said. "Or worse yet, they don't ask until it is too late to qualify."

He routinely gets requests for Northwest Indiana residents who've recently discovered a serious health issue or who are retiring and looking for a policy.

"I wonder, 'Where were you 30 years ago?'" West said.Those people were thinking they were immortal, like I did 30 years ago.

Back then, life insurance seemed as needed as dentures or a cane or wrinkle cream. Its growing importance has crept up on me like gray hair. Has it for you too?

By Jerry Davich - Chicago Tribune