Are You Properly Insured?

Death is a part of life that we all expect. We all know it, some try not to think about it but the fact is, we all have to deal with it at one point or another. They say, “When you know better, you do better”, so why are so many people unprepared? Burials are expensive and can be taxing to our survivors. The proof is in the increasingly common “Go Fund Me” pages for funerals.

I, myself, was a victim of this shortsightedness. On May 25, 2002, I lost my wife in a car accident while going to see my birth mother in Conway S.C (I will explain why I say birth mother later). We were unprepared and we had two small children. I found myself having to borrow money and luckily I had a sister who was a mortician/funeral director, so she cut me some slack. We had no life insurance and I had to take care of the kids on my own. They received a small amount of social security, which was barely enough to cover the mortgage payment.

I had known about life insurance because I had heard my mother speak about small policies that she had on my father. I vaguely remember but I know that it was just enough to bury someone and maybe have a little left over.

By the time I was older I was living with my second mother, a white mother (that’s a story for another blog). I learned a lot the very first time one of her family members died. She was always the one who was left in charge when someone died. Her aunt had died and had a life insurance policy and a living will. Everything was spelled out to a “T”, or so I thought at that point. The will decided what money would go to whom. It was actually enough money to bury her and help out quite a few people in her family. That was my first time seeing life insurance work in that way.

The second time I witnessed life insurance is when another of my second mother’s aunts had passed away. This aunt was a little more established than the first and the will was much more involved. One of the clauses in the will was a no contest clause. If you contested the will you were automatically out and you got nothing. I realized how people avoided the drama of families fighting over what’s left in the will. It’s a situation we see almost as often as we see people leaving behind a will. She also left enough money to leave several people very well off. She also had a “spend drift clause” that would remove you from the will if you began spending recklessly once you found out that she was sick or would die soon. These were all new things to me.

The third time I experienced life insurance was unfortunately when my second mother passed away. However, keeping in the tradition of her family she also had a will and left enough money to significantly impact the lives of the ones she loved. She took care of her grandchildren and nieces and nephews first and then distributed the rest between myself and other family members.

I learned something new about wealth and sustaining wealth. Having sufficient life insurance and a well thought out plan can make life much easier and also alleviate poverty in just one generation. I read, “About 60% of “middle-market” African-American adults own individual life insurance, compared to 46% of the general middle-market population, according to industry group LIMRA.” While this may seem like a good thing, studies also conclude most Americans (of all races) are underinsured. This means that while they may be able to cover their funeral expenses, they are likely not prepared to have enough funds to take care of their loved ones while they are gone and sometimes, worse, they leave a financial burden on them.

In subsequent blogs I will discuss ways to make a million dollars by doing some very small things. Systematic accumulation of wealth through various vehicles is more a matter of discipline than anything else. As we begin to understand the different avenues of producing revenue streams or even money saving techniques that actually turn into increased disposable income, you will be amazed at how easy it is to accumulate a substantial amount of wealth over time.

Life insurance is definitely a way to kick start the next generation’s life. Spend some time teaching them about money and money saving ideas and allow them a chance to rise above poverty.

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