A fun loving sales representative, who made $100,000 a year, who lived modestly and nearly debt-free. Much of the disposable income went to bad habits, unfortunately, bad in nature. However, despite bad financial habits, this was a good person, a son, father, and brother.
After meeting with the sales rep, and a performed a thorough review and a needs-based analysis. The lack of life insurance was obvious, even to the untrained eye...there was none in place. It was a sad situation, but there was not a spouse to be concerned with and only one child, who was out of the dependency stage.
The analysis highlighted the only debt was a newly purchased mortgage, totaling over $100,000 and with 25+ years remaining. Although the mortgage was light in nature, compared to many, the fact was there was no insurance in place to cover the debt, in case the "if" happened sooner than later.
401K value was modest as well, but would help with the debt and the sole beneficiary, the lack of an insurance policy was significant! The two other items that were quite evident, the lack of final expense funds and funds to pass onto the beneficiary, the older teenager.
As a result of the consultation, the sales representative did purchase a $50,000 10-year term policy. Although, $50k did not cover the mortgage, expenses, and pass on money to the older teenager, the amount of the term policy death benefit and 401k would help. Some life insurance is better than no life insurance!
Around a year later, a call received from the sales representative, generated a request to terminate the policy. Before instructing the client to contact the insurance company directly, a plea to reconsider the policy termination was given, as it was doing what was best for the client. The client insisted and the decision was final, terminate the policy with the company.
About six months after that, a family contacted the office, asking if the client had life insurance. The family member quickly told me that it was discovered there was Cancer (stage 4) diagnosis and was -terminal. Because there was a certified Power of Attorney, we could discuss the situation.
The conversation was highly uncomfortable, difficult, emotional, and purely sad. Another piece that was unpleasant, the 401K had been surrendered. If the policy was still in-force, at least the family could possibly utilize the accelerated death benefit and have access to nearly 75% of the death benefit, helping the family afford treatments, bills, and buy some time to sell the home and avoid the discussed pending foreclosure.
It is definitely a sad situation, but one that is highly avoidable. Yes, some better financial habits would have helped. Yes, a cancer policy would have also helped greatly. The life insurance policy would have helped those responsible for the care and affairs. Please apply for life insurance today! You are never more insurable, than you are today.
