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Do you puff out your chest a bit when the subject of planning for the future comes up? If your job has a plan to which you contribute and you tuck a little away each month toward your child’s college costs, you probably do.
First, kudos to you for thinking ahead! Before you get too proud of yourself though, let’s revisit a common story from childhood. Remember the one about the Emperor’s New Clothes?
So keen was the Emperor on having the finest of things, that he believed the weavers who sold him clothing of the very finest material. Indeed, material so fine that those who are unfit for their position, stupid, or ignorant could not even see it. Of course, the truth was they sold him very expensive air while they laughed at his foolish pride.
Are your shiny future plans much more than a false sense of security? Are you living proud of your planning, when in fact you would leave behind financial devastation? If you were to pass away tomorrow, how long could your family continue in the lifestyle you have planned for them without your income?
The newest smart phone, a late model vehicle, beautifully manicured lawn, these are all nice things to have. They scream to the world, “Look at my fancy new clothes! If you can’t see them, it’s because you are unworthy!”
So, let me be the child screaming simple truth: If you don’t have disability insurance and life insurance, you’re strutting around naked.
Some people have a policy provided by their job and think it is sufficient. If you’re in the same boat, give that a little thought. Insuring your life includes a lump sum to pay for funeral expenses and to pay off existing debt. While valuable, is it enough provide the cash your family needs as monthly income? Not costing your family money is far different than providing for them.
While you are living and working, you bring in an income. To truly insure your life means to insure that income. You probably plan on working at least another ten years, and for many it is likely closer to twenty or even thirty. How much income will you bring home over the course of that time? Whatever the figure is, add that to existing debt and funeral expenses to come up with what would fully insure your life. There are plenty of calculators to help you with this.
It may be much more enjoyable to parade through life like the emperor with no clothes. They do say ignorance is bliss. Envious neighbors and shiny new stuff is kind of fun, let’s be honest. If we’re going to be honest, we may as well broach the fact that it is simply dark and unpleasant to consider your own demise.
The truth is that you probably are naked though, in terms of life insurance. Truly insuring your life for your family will feel far better than those fine but fake clothes ever will. Once they sell that new car and dip into the college fund to make the mortgage and utility payments, those grand things aren’t worth much. It is the difference of a finely-made winter coat that keeps one warm through many winters, or the stylish fad of worthless clothing the emperor was suckered into buying.