In the last six months, I’ve seen both friends and family who are in the 40 to 45 year old range dealing with major medical issues. When people told me that the aches in my joints would be just a little bit worse in my 40s. . . well I hate to admit but they were correct. Recently, I had three different people I know who drove themselves down to the emergency room thinking that they might be having a stroke or heart attack. I know three different people who were diagnosed with some type of cancer that they are currently treating. I also know of two separate cases where friends found out they have diabetes. In your 20’s, you never really had to worry about this kind of stuff. In your 30’s you start to feel it a little bit here and there. But, in your 40’s is where you start to see some of the more major stuff.
I thought this article would be really important because when it comes to financial planning and life insurance, it may be difficult to potentially impossible to apply to get new life insurance if you have something that happens to your body that would cause you to be uninsurable. Or, you have something happens that would allow you to get insurance but the costs would be unaffordable in your budget. This is why if you are in your late 30’s or early 40’s it may be a great time to sit down and review your life insurance needs.
Many people seem to be confused around their options and how they can buy the protection. Before you purchase life insurance, make sure to always have a discussion of your goals followed by an analysis so you can figure out the right amount of insurance you need. This is important because most Gen X’ers are massively UNDERINSURED. Realize that if you buy a $1,000,000 term insurance policy today, in 20 years that $1,000,000 will only be worth $500,000 20 years from now. Here are some thoughts around life insurance consideration for those of you who are in that early 40’s range.
1. WHATEVER AMOUNT YOU COME UP WITH INITIALLY, BOOST IT HIGHER - A lot of Gen X’ers get their term insurance coverage through the workplace, and I think the trends show that many Gen X’ers will change jobs many times before they reach their final place of work. You should not depend at ALL on the work place life insurance as part of what you need. With outside coverage, many Gen X’ers arbitrarily buy something like $250,000 or $500,000 of life insurance to ‘cover the mortgage’. I’m going to tell you that for most Gen X’ers, less than $1,000,000 is likely to little insurance, but for those of you with incomes over $100,000 a year, the life insurance number is more in the several million range than a flat $1,000,000
2. MAKE SURE YOUR TERM INSURANCE IS CONVERTIBLE - (for 10,20, or 30 years)- Insurance companies generally play on a bingo board. What this means is that depending on your age, health, etc. there are particular companies that price their term insurance product to win that space. If you buy term insurance, your insurance agent should be able to show you 5 to 10 different carriers. If you are buying the term insurance product from a proprietary agent, odds are you aren’t getting the best deal and that is where they make their best commission. Most of the level term insurance policies do have a clause that allows you to convert these to a permanent policy without evidence of insurability. That’s the key part to the equation. If your term insurance isn’t convertible, you could run the risk of becoming uninsurable down the road and still needing insurance coverage.
3. GET SOME TYPE OF PERMANENT POLICY – People avoid buying permanent insurance because they think it costs too much, they don’t understand it, or they read somewhere on the internet that it doesn’t make sense. Suze Orman says so which must make it true. With permanent insurance there are various types of product structures, cost structures, and companies that are engaged in selling these products. You should do your homework to figure out which type makes the most sense for you, but what should be true for most of you in that early 40’s range is that getting some type of permanent policy will ensure you have insurance coverage for life.
Most people don’t go home at night or wake up in the morning thinking about how much life insurance they need. Most people think that nothing is ever going to happen to them, but I think in your early 40’s you can start to see things happening to people around you as I have seen in the past six months. Smart financial planning means not only looking at your overall financials, but assessing what types of coverages you will need at different ages in life. Make sure to always consult an independent insurance agent who can represent many carriers or pay a fee-based insurance advisor to help guide you through this difficult maze of insurance decisions.
Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.
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