Why Life Insurance?

James Carvin, the insurance guy

If you’ve been following me through the years, then you know that I believe in the maximization of awesomeness. In Season One of my podcast, we asked what maximized awesomeness was. We looked at the purpose of life. We asked what was on your bucket list. We asked what would give your life the most meaning and fulfillment today and in the world you leave behind when your days here reach their limit. I never once talked to you about various kinds of insurance policies that could help you achieve some of these worthy goals in Season One.

James Carvin, 2023, the insurance guy – a rare image without a top hat on

As a dedicated road warrior, I’ve spoken with literally tens of thousands of people about this and here is what I’ve found. Generally, college age adults think they will live forever. It is refreshing to see people living for the moment. Tomorrow is another day. We can all learn a lot from young people. We were all young once. And we know that we don’t need to carry the weight of the world on our shoulders everywhere we go. But alas, graduation does soon come and the reality of struggling with careers inevitably sets in. By age thirty they start thinking about how short life is. Usually it’s the birth of a child that changes a mindset. Then they start counting their days. They add up expenses. They still have a list of thrills and experiences they don’t want to miss out on, places to see, things to do, but their minds start counting, calculating, thinking ahead.

We never lose our youthful heart. It stays inside us when we become responsible adults. Make sure you awaken it every now and then. Let it play. Find your balance.

I’ve found that, for all ages, about seventy percent fail to save and plan well. More than half live paycheck to paycheck and struggle with debt. Am I wrong?

You know I’m right. Some rise up and lose homes when they suffer from tragedy. That man whose wife is suddenly paralyzed from a stroke when she’s thirty eight, what did he calculate? One thing I know well is that disability benefits vary greatly. Few have checked to see what their income would look like if they were suddenly disabled, or their spouse. Sadly, it’s those with the most modest incomes that receive the most modest disability benefits, not to mention retirement incomes.

I know this happens. It happened to me and my wife precisely as I just described. Since 2003, when her stroke happened, I’ve had a one income family. Not everyone knows this about me and my wife, Lisa. Bad things happen to good people. In Season Two I hope to bring her on the podcast and introduce her to you.

Lisa Carvin, my wife – age thirty eight, returns from the hospital to be surrounded by friends from the Christ Fellowship church choir, who’d been praying for her (2003). She’d been in a coma after a major hemmorhagic stroke. The doctors predicted she wouldn’t survive. Prior to the stroke she’d had no high blood pressure or cholesterol – never drank or smoked and worked out regularly. A three month hospital stay will wipe out a family’s savings very quickly. Afterwards, there will be only one income if insurance is inadequate. She’s been paralyzed in her left side ever since. A disability rider on a policy could make a huge difference while you are living. Hindsight is always 20/20. Are you prepared to care for the ones you love?

You should know that no tragedy that ever struck me ever stopped me from thinking about making the best of this life, of finding happiness in what I could. One thing that gives me a very great sense of peace and well-being, is the hope of achieving my own greatest potential despite these exceptional challenges. In fact, I look beyond this life and think of the world I will leave behind me too. For me, the podcast is a digital legacy. I love my wife. And I love my children. But they are not the only people in this world. In truth, what I can actually leave behind, isn’t just measured in dollars of wealth transferred to my surviving family when I die. I can give to all the charities I value.

Not everyone I help even has a family. But everyone has a legacy. They have an impact, large or small. I would like to leave the world a good example to follow. And that means each of us thinking seriously about what we leave behind.

To be frank, there is one thing we can all count on. We are all going to leave this world. And when we do, we will either leave it better than we found it when we arrived, or worse. Whatever we may enjoy in this world for ourselves, we are not alone. How much do other people matter to us? Some people care about their families. Personally, I like to see good things multiply. That includes legacies. If I can teach my children to build legacies of their own, I will have done well. If I can lead well, they will learn. And if I can be no burden to them when I’m gone, then I can bless them with more opportunity.

If you could place a value on how much your family is worth to you, what dollar amount would you put on it?

Author Unknown

What applies to me applies to almost everyone. More than half of Americans have no insurance or they are under-insured. A funeral with a burial costs up to $30,000 today, sometimes more. The cost keeps increasing. Some pre-plan. They buy urns and arrange for cremation to save money. But those things are just the beginning. Does anyone need to fly into town? Aren’t last minute reservations a bit more expensive than ones booked months in advance? Will your grieving family need to take time off work? Will your body need to be transported from a morgue to another city? Or let’s think more positively. Would you perhaps like to offer your children a cruise to memorialize you in a more relaxed way to take away some of their grief? Wouldn’t it be nice if they could comfort one another with less daily pressure on a tropical vacation? What will your last love message be? What can you do for those you love and those who love you? You may wish to plan for more final expense costs than average. Each of us does what we can.

To be sure, some people start planning later in life than others. I work with insurance carriers who can help defray final expenses up to the age of 89. I’ve got some that provide living benefits. That means that if you have high end-of-life hospital bills, those things can be paid for by insurance, rather than passed onto your family as collectible debt. Don’t forget that creditors always have first dibs on your family’s inheritance. Fortunately, this is not so with insurance policies. Creditors can’t touch them. Not the IRS. Not anyone. The full amount goes straight to the designated beneficiaries, usually within days – even if you’ve failed to write a will and your estate is in probate.

(Please don’t fail to write a will. You do not want your estate in probate. Otherwise, the lawyers and the state will tie it up and raid the kitty. This places tremendous grief on survivors. It often has disasterous results. And it can leave families shattered).

Another common sage piece of advice is that the earlier a person plans ahead, the less expensive it is. Some people take out huge term-life policies at very low cost. That’s probably a very good idea. It protects them from calamity and then some. Term products rock. But there’s always a debate about which is better: term or whole-life. Which one wins? The answer depends on what happens. If we could predict the future, that would make these decisions much easier.

Lisa, me and the boys: a two income family two years year before the stroke.

Or maybe, you don’t have to decide. One insurance carrier I work with offers a term product that converts to whole life at the end of the term. Others, offer cash back on premiums. All the money you put in comes back at the end of the term. You can buy terms from ten to thirty years. The difference between term and whole-life is that with “term,” at the end of the term you have no insurance. If you out-live your term policy but want to remain insured it can get expensive because you’ll need a new policy. This can be exceptionally expensive if by the end of your term you are in poor health.

Your age is always a factor in how much insurance costs. The older you get, the more expensive it is. Also, if you do start to have health issues, like high blood pressure, diabetes, cancer, stroke and so on, insurance will cost more and the amount of protection you can offer those you love will decrease. Be aware that if you smoke or use nicotene products, your costs will go up by as much as 100%. But I have some good news. I also work with carriers who give you a few years to quit and lower your premiums to non-smoker rates from day one. Is your family worth quitting tobacco for? If you could place a value on how much your family is worth to you, what dollar amount would you put on it?

People often say they can’t afford insurance. If for the cost of a cup of coffee a day you could prevent your spouse or child from resenting you for ther rest of their life for leaving them with tremendous unplanned-for expenses when you died, would you give up your coffee? Would you give up your cigarettes or vape?

Maximize your awesomeness. We’re here to help. James and Lisa Carvin

The nice thing about whole-life insurance is that it is a sure bet. You’ll definitely die one day. To understate the matter, very few people ever escape that. The question always comes down to how much you can afford. You don’t want your policy to lapse. That’s the only way it won’t pay out. But there are riders like “waiver of premium”that some of my carriers offer. Well planned riders can help you keep your payments going so that can’t happen. You can also build up cash value in many whole life policies. Cash value can be used to collateralize loans if you need money when life throws you curve balls down the road. More positively, some people use it to secure mortgages, start businesses. It can also be used to offset medical expenses and pay off high interest loans with lower rates. It’s your money. Just be aware that anything you’ve borrowed from your policy will be repaid when you die, if not beforehand. If that happens, it won’t be transferred to your beneficiaries. Otherwise, you have both a growing asset you can borrow from and an insurance policy.

Annuities & Living Expenses

Life insurance helps us think about what happens when we pass away early. It plans ahead for bad things and it can be a great savings plan and investment, but there is a mirror side to that. It’s when we are healthier than average and live longer than we expected to. Oddly, being healthy and living longer can be a burden on others too, because our retirement income sometimes expires before we do. But there is a perfect product for that – annuities. Like insurance, annuities come in many shapes and sizes. Some are tax deferred on the front side as you contribute to them. Check out IRAs, Keoghs, 401Ks. Others wait to tax you when you start withdrawing the money you saved. Typically, this happens when you are in a lower tax bracket.

I won’t get into the complexity of it here. Suffice it to say, that I’m a licensed broker who can offer many types of products. What I don’t offer at this time is any products that put investors at risk of losing their money.

One of my favorite products isn’t an annuity at all. It’s an Indexed Universal Life insurance policy, commonly known as an IUL. IULs are indexed on things like the S&P. If stocks soar, so do IULs, but they limit risk. If the stock market plunges, the IUL will hold its value until the index starts to rise again. IULs build up cash value plus dividends and you can borrow from them at low rates or use that cash value to pay off other loans. Generally, IULs are great products for what we call mortgage protection. If something were to happen to you so you couldn’t work twenty five years into a thirty-year mortgage, you wouldn’t want to lose the equity you had built up in your home. The bank would seize it if you foreclosed. But you could both keep your policy’s value and borrow on it to keep the mortgage payments coming if tragedy struck. It could save your home for you and your family.

Typical cost of a $250K IUL for healthy non-smokers. Source: Smart Asset

I’m highly connected to all the best A rated insurance carriers and help my clients find the best products they offer. I love to teach and will take as much time as you need to fully understand what your benefits are and what it can mean for you in real terms as we consider the various paths your future might take.

You can also expect to hear me talk much about health insurance come open season. Stand by. Fighting the rising cost of health care, especially in your senior years, is one of the most important things you can do to protect your final legacy impact. It’s a wonderfully selfless thing to see when people do so much for the ones they love. The thought of burdening people with our debt when we die is upsetting. Nothing makes that happen faster than uncovered health costs. There are dozens of ways to stand guard against passing on that sort of legacy of debt. These are the sorts of things you’ll be hearing about as the podcast develops.

James Carvin lives in Tallahassee, Florida. He has been hosting the Applied Awesomeology podcast since December, 2021 and has been developing a course in Applied Awesomeology that he hopes to introduce as a freshman level collegiate philosophy course. He  joined the Spirit team at Family First Life in April, 2023.

Florida insurance license #W965746
NPIR #20666979