I recently had a discussion with a young person about personal finances and how they recently bought a property and all that was involved with this purchase.
The discussion took on two major points, one being they knew very little about purchasing a property and all that went with the purchase, and the second was about life insurance, and if they really needed it or not.
The person was very well educated and worked in the medical profession. So even though they were in a professional position and well educated, there was little they knew about what was involved in purchasing a property and obtaining a mortgage. We were discussing that each of us knows our jobs and what we do, and not everyone is a clued in on personal finance issues such as mortgages, and buying a property. Since it is what I do for a living, and have for the past 26 years, obviously I know the ins and outs of mortgages, personal finance, insurance, etc. They know the medical world, which I do not.
We each have our areas of expertise.
The topic then changed to why should they get life insurance? If they were to die, the property could go back to the bank who held the mortgage and that would be the end of it, and the end of them as they would be dead.
I explained to this young person that hopefully they live a very long and healthy life, but during that life and during the period of paying for their new property, there can be some major changes.
One change may be they get married, or have a long-term partner, as they are now single. If this were to occur and they live in the newly purchased house, this may change their attitude towards having a life insurance policy in place to payoff the mortgage to allow either one of them to continue to live in the house.
Naturally their argument was each could afford the house alone, so no need if one of them died to have insurance.
Next I brought up the fact they may have children at some point and may wish to insure the children are not moved or disrupted if one of them were to die. This also brings up additional costs and financial issues, so having children may change their finances if both of the partners work, as one may stay at home with the kids, or other changes that can occur when raising a family.
There also is the possibility of becoming uninsurable as one gets older. Then if they were to need life insurance, they may not be able to get it. So taking out a life insurance policy now while one is young, can be a prudent thing to do.
After our little discussion I could see a change, even if it was ever so slight, in the person’s attitude towards if they needed life insurance or not.