Just a few days ago we (The Financial Prepper and Mrs. Financial Prepper) drove to Katy, Tx from where we live right above Lake Ponchatrain in Louisiana. We left at 5am knowing it would be a long trip to pick up our new-to-us truck we were buying to replace the one totaled a few weeks ago. Over the course of the night into that morning weather forecasters were continuing to predict severe weather from hurricane Delta. After passing hundreds of "blue tarp" roofs, (FEMA response to damage from Hurricane Laura) within sight from I-12 in Lake Charles we made our way west to Katy. Traffic wasn't bad, only slowing here and there briefly.
Fast forward 12 hours, on our return trip through Lake Charles, west bound traffic was backed up for close to 15 miles at a near standstill as all those last minute evacuees were leaving the area as Hurricane Delta was less than 20 hours from making landfall. We stopped for gas at Love's Travel Stop that was non-stop busy all day according to the cashier. They were boarded up in anticipation of the coming weather but still open. Vehicles were loaded down with people, pets, and belongings. My heart went out to them as it would likely be hours before they reached their destination. And no telling what they might return to.
This line of thought about the anxiety of the unknown that residents were likely experiencing weighed on me. Some may come back to homes that are flooded or damaged that would take weeks or months to repair. Power outages may take days to resolve. Businesses may be damaged, and jobs lost. Those who stayed, whether by choice or not, may be injured or even killed as a result of the hurricane. This is a scary reality. And nothing can change the reality of a natural disaster. It's bigger than us. All you can do is evacuate or stay and hope and pray for the best.
Nothing can change the powerlessness we feel, but I want to emphasize the value of insurance at times like this. It's when you don't have any and you need it that you look back wish you had it. And it really is a small price to pay. Whether it's vehicle insurance, homeowner's insurance, renter's insurance or life insurance; it's all about protecting the current value of what you can potentially lose and its future impact. Even if your vehicle is paid off, it has a value and a cost (they are not the same thing) to replace. The cost is literally the cost to go out and purchase a car that is similar or equivalent to that which was lost. That is determined by the insurance company, not you. The value is the cost of the replacement and any additional cost that disrupts your life. For example, you may have vehicle damage from a storm, but you may also have lost wages from not being able to get to work or the cost of renting a car. Maybe it's the personal cost of not being able to get to that doctor's appointment or that job interview, etc.
Same with your house. If you don't have the cash available to repair or replace what is damaged or lost, then you need insurance. This is especially true with life insurance. Although there is no monetary value that you can put on a life, the purpose of life insurance is to provide certainty that if the insured were to pass, there would be enough money to continue to provide the same lifestyle for the remaining family members. It's not just about a burial and lump sum payout to pay the house off. It's about the future and the money that won't be made by the one who passed away and how your family will live with for the next 10-30 years, or however long. Because no one can be replaced, and neither can what they contribute to their family and finances.
Whole Life insurance is like a multi-tool, there are multiple uses that go under the radar and aren't talked about. Like I said, it's so much more than that burial cost and lump sum payout. Take a look at our resources about the multiple uses of cash value life insurance and how it can even help you save for college.
And if you have term insurance, it's better than no insurance! Yes, it is significantly cheaper. There's a reason. Insurance companies use actuarial tables and have mortality rates down to a science and their average pay out is just 1% of all policies. That's a 99% success rate on their end that you won't pass away during your term. I think the next blog I will go into more detail on the differences between term and whole life insurance.