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Do You Really Need Life Insurance?

I just got approved for a $3 million life insurance policy.

Now, normally I’d say I don’t need life insurance because I'm married and don't have kids. It’s not complicated. Meaning, if I go and take a dirtnap, my wife gets everything.

Thing is, though, we’re in the middle of building a house. So, I wanted to get some insurance in case I get run over on the road while we have all this short-term debt. It just makes sense right now.

What I have is an amortizing life insurance policy. It starts at $3 million, and next year it's at $2.7 million. The year after that, it's at $2.4 million. And so on.

The idea is that it approximately mirrors a mortgage—and because ours is a 10-year ARM (adjustable-rate mortgage), it works out perfectly.

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The Nightmare Application Process

Consider yourself warned: Life insurance companies do extensive medical exams on people applying for life insurance. I had to fill out a huge amount of paperwork. Multiple questionnaires.

It's a stressful process. They dig through all your health records, go to your doctors’ offices, and try to find derogatory information. And in my case, this went on for six months!

One of the things they do is warn you about fraud. They're like, It’s a felony to defraud an insurance company and blah, blah, blah. They tell you this all the time.

Long story short, don't lie on the application. Tell the full truth. It should go without saying, but they’ll catch you slipping up on the smallest, most innocuous details.

Because once you fill out the application and this crazy-long questionnaire, you have an interview where they ask you all the same questions that are on the questionnaire to see if you mess up.

And you could get in trouble by total accident. For example, you could write that you smoke six cigars a year on the application, then mention in the interview that it’s around four a year. They’ll bust you on little stuff like that. It’s insane.

So, I suggest printing out your application. That’s what I did. Just feed them your exact answers. No sense in playing with fire.

Term vs. Whole Life Insurance

I'm not a fan of whole life insurance. Term life insurance? Great. What I have is a term policy.

Whole life is a combination of two things: an insurance policy and an investment vehicle.

I don't understand why you have to combine the two things. Why do you have to mix your peas and carrots? I want the peas over here and the carrots over there. I can invest fine on my own. I don't need to combine it with an insurance policy.

This will probably be the only life insurance policy I’ll ever have. Obviously, I don’t want it to pay out. I don’t want to die.

But anyway, now I'm covered. I have life insurance, and if I croak, you'll at least know my wife and cats made out like bandits.

Jared Dillian
Jared Dillian

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