September is Life Insurance Awareness Month. Life insurance is an interesting thing. In his book Against the Gods: The Remarkable Story of Risk, Peter Bernstein explores the history of life insurance not as an “invention”, but as a crucial outcome of humanity's developing ability to measure, calculate, and manage risk through the evolution of probability theory and statistics. At its core, life insurance was a social construct- a way for the people in a community to spread risk. Picture ancient Greece, where families depended on one another for basic needs: one family grows grain for food, one family is skilled in baking. Another builds dwellings and engineers roads, and yet another raises livestock that the community depends on for a wide array of uses. When something happens to a community member who is vital in the lives of others, there is a ripple effect.
This basic economic principle led our ancestors in Greece to invent the pooling of money- rather than stressing out the whole community with an ancient form of reactive GoFundMe, they grasped the concept of mutual assistance and statistics. If everyone contributed something regularly, then when someone became sick or died unexpectedly, the “mutual assistance” that had been accumulating could be tapped into, with far less impact on the community.
Life insurance is so vital that most employers include some kind of policy as a benefit of employment, even if it’s far less than the employee really needs. The debate about life insurance is less about its necessity and more about it’s character. What type of policy is good? How is it priced, and why are some policies expensive while others are “cheap”? How can I trust the person or the company selling the policy? Who gets to decide if I’m accepted or declined? What happens if I live longer than the policy intends, or if I want to stop paying for the policy, or if I die?
Questions like these make the experience of purchasing life insurance a daunting task. This is why it’s important to seek help from a licensed professional.
When I was new in this business, I side-eyed life insurance. I started my career selling property and casualty policies, and the math around insuring a home or auto made more sense to me. Life insurance seemed complicated and if I couldn’t understand it, how could I expect to feel good about selling it to clients? So, I embarked on a journey through the American College to obtain my Life Underwriter Training Council Fellowship. It was during this coursework that I really began to understand not only the importance of life insurance and its place in every person’s financial portfolio, but also the genius in its engineering. The magic that results from the right company choosing to create a strong product with indelible features that benefit the policyholder while they’re alive and the chosen beneficiary upon their death.
Now, twenty years later, I’ve seen the ancient concept of risk pooling in action in modern times. I’ve witnessed how a family can be kept whole financially when a provider is lost. No amount of money will replace a loved one, of course- and that’s not the job of life insurance. Its job is to make sure that the family can remember, mourn, and celebrate the life of someone without the undercurrent of financial stress.
Life insurance creates security for families and their community. It takes away the unseen and often uncalculated burden left behind as a natural consequence of death- the bills that come anyway, with complete disregard for a family’s grief. It gives breathing room, and a place to land.
Don’t put off learning about and exploring a life insurance plan just because it’s uncomfortable. Not having the right plan in place will be far more uncomfortable for everyone you leave behind. September is Life Insurance Awareness Month. Talk to an expert about your needs.