My Junior High basketball coach, who also happened to be my math teacher, had two sayings that have stuck with me to this day. After explaining a new Algebra concept, he’d always ask, “Clear as mud?” Which despite our “tween angst,” would usually produce a chuckle or two.
The other phrase happened on the basketball court. He was known for breaking a clipboard or two, while he yelled, “Well, that was a day late and a dollar short!” any time our defense lacked, or our rebounds were delayed. He was tough, but he was a great coach.
So as a financial coach and advisor for teachers, I’m going to refer to the latter quote first. “Don’t be a day late and a dollar short!”
And it is really important that you keep reading. REALLY. Many have closed this page by now. But you are still here, and this could have a huge effect on your family.
I need to get a bit of “mumbo jumbo” out of the way first, but then I am going to tell you the 4 biggest mistakes teachers make with life insurance.
There are different types of life insurance. Today, I am going to focus on term life policies. In looking at the demographics of my “inner circle” members, I find that most of you are in the years where you have a bit to go until retirement, you may still have a mortgage on your house, and some of you may have kids who are still at home or possibly in college.
This is the perfect time for you to have a term policy in place! God forbid anything were to happen to you in the next several years, but no one has a crystal ball (if you do, let me know…I’d like to borrow it!). If you were to pass away, how would your family cope? How would the income and benefits you generate be replaced? If you can’t answer that question, make sure you do something about it, and when you do, remember these four things:
#1: TOO LITTLE TERM LIFE INSURANCE
Some folks think that $100,000 or $200,000 in coverage is more than plenty. But, think about your life right now. What income would your family lose? How many years would it need to be replaced? How much life insurance do you currently have? What money is needed for college expenses and retirement planning? How much debt do you have?
The average teacher’s salary in Michigan is just shy of $62,000. You most likely fall below or above, but I am going to use this figure as an example: $100,000 in a death benefit would replace one and a half years of income. That’s it. What would your family do at that point?
#2 TOO LATE FOR TERM LIFE INSURANCE
You know, life insurance is one of those things. You know you should probably do it, but it is not the most exciting nor inviting topic, and it seems like a daunting process to some. But this is one thing that you should not put off until tomorrow. Check out: https://www.limra.com/en/newsroom/help-protect-our-families/ to learn more.
However, here are a couple of reasons why: first of all, you have to answer health questions in order to get a policy. You may be healthy today, but remember that elusive crystal ball? We never know what tomorrow will bring. There may be a time in the future where life insurance is no longer an option because you can’t qualify for it. Secondly, the premium on these plans will increase the older you become. There may be a time in the future where life insurance is no longer an option because you can’t afford it. Finally, the older you become less options are available.
#3 TOO SHORT A TERM
Term insurance is titled as such because it only lasts for a specific time period, or “term.” Yes, a lesser term policy will cost less, but what happens when that term runs out? Refer to the issues above under “too late.” Same thing!
#4 TOO SELF-RELIANT FINDING TERM LIFE INSURANCE
The internet is a lot of things, but it can be pretty creepy! I don’t know about you, but an ad for a shirt I looked at last year still shows up on my Facebook timeline. Sometimes I even think my computer listens to my conversations! If you start poking around online to find life insurance, you will be SPAM’ed out of your mind! You should work with an independent agent (one who represents multiple carriers) who can shop the best rate for you and walk you through the application process. Trust me on this one. Self-reliance is a good thing usually, but not so much in this case. Also, your insurance needs change over time and should be reviewed to make sure you have the appropriate coverage as you age. I can walk you through it, by the way. I am a teacher who teaches teachers!
So, clear as mud? ? Give me a call and we can chat about term life. I hope you get a policy, and it expires on you, I really do! That would mean you will live a long life! In fact, according to Penn State, only about 1% of term policies pay out. I hope you are one of the 99%. But for goodness’ sake, if you happen to be the 1%, don’t leave your family a “day late and a dollar short” if something were to happen to you!
