Life insurance is not an appealing subject. It’s not something that people enjoy talking about with friends or family at the dinner table. However, most everyone I talk to can see the value in these types of protection policies. Unfortunately, they often put off purchasing a policy and don’t get around to it. Then when they finally do get around to it, their options are limited. For those of us who work in a dangerous work environment, it is imperative to not make this common mistake. So what is the importance of Independent contractor life insurance?
The Importance for Independent Contractors to Have Life Insurance!
The construction industry is about 4% of the entire United States workforce. Even though that’s such a small portion, 21% of all work related deaths are from within the construction industry. Also, even with all of the safety regulations put in place, the amount of worker related deaths has increased 7% each year for the past several years.
In this industry, roughly 75% of people will suffer a disabling injury over a 40 year career. One slip or a fall on the job can change your lifestyle forever, just ask my friend Todd. Todd has been one of my golfing partner’s for many many years. About 10 years ago he fell off three stories of scaffolding. He broke both wrists, one ankle and fractured a few discs in his back, making it impossible for him to continue working full time.
Thankfully Todd didn’t lose his life after falling three stories. Especially because he was very underinsured.
Todd was nonunionized and had a small life insurance policy offered through his employer. This was roughly 3-4 times his annual salary. This sounds like an adequate amount, right? Wrong. This death benefit amount may be enough for someone who is single and has to pay off a mortgage, and various final expenses. However, for anyone that is married or has children. It’s crucial to sit down with an expert to see all your options. We can help determine the correct amount of protection you need for your family.
How Much Life Insurance Does an Independent Contractor Need?
So how much life insurance do you need? If you are like many in this industry that are married, have children, and/or own a business, it can be a tough question to answer. Most experts would advise to budget for a policy that is 7-10 times your yearly salary. However, if you are like others in the middle class with a mortgage and credit card debt, a higher amount could be advisable.
This way if an untimely death does occur. Those who would assume your liabilities won’t have to negatively change their lifestyle in a time that will already be filled with grief and sadness.
With the inevitably tough working conditions this industry faces in Northern Michigan. Purchasing the correct amount of life insurance is the best way to protect your family from the risk of a fatal accident at work. Many folks don’t take advantage of these policies until they are married or have children. If you are planning on getting married, having children or starting a business, the earlier the better. In some cases, folks that are in their early forties pay almost twice the premium as someone who is thirty five.
You may think a policy with such a large death benefit would be cost prohibitive. However, term policies, set to not build a cash value but to provide a death benefit for a certain term (for example until you are of retirement age) are surprisingly reasonable in cost. Working in the construction industry, a term life policy may be an essential piece to a sound financial plan for you and your family.
When choosing the policy that makes the most sense for you and your family. It is important to sit down with an independent advisor to review all of your options.
An independent advisor can show you 10-15 options that are the best for your unique situation. Finding an independent advisor who specializes in working with folks in the construction industry will give you additional confidence to know that the type and amount of coverage is correct. Until next time, be safe out there.
If you would like further information on planning for or reevaluating your retirement, or simply want to chat, give Dylan a call at our local Traverse City office at 231-421-7391.