Life Insurance, What Happens if You Live?

Have you ever heard a whole life insurance agent ask, "What happens if you live?"  Let's quickly answer this question.  Well, if you live, you should be paying off your debts including your mortgage.  You should be saving money to pay for retirement.  Your kids will grow up and start becoming independent.  If you live, you will have no damage to your family financially, because you will be there to take care of them!

With life insurance, you are simply planning for likely scenarios, living and dying.  While life insurance is a piece of the puzzle, you really want to make sure your family is taken care of in either scenario.

According to www.livescience.com, "A 20-year-old U.S. woman has a 1 in 2,000 (or 0.05 percent) chance of dying in the next year, for example. By age 40, the risk is three times greater; by age 60, it is 16 times greater; and by age 80, it is 100 times greater (around 1 in 20 or 5 percent)."

So the question is, if you are a 40 year old woman and you know you have a 1 in 666 chance of dying in the next year, should you cover yourself with life insurance?  Assuming the risk is 1 in 666 over ten years (although the risk actually increases), you can calculate the probability that you live over the next ten years.  This probability is (665/666)^10=.985.  This means at least 1 out of 66 (66-100/1.5) women who are age 40 will die over the next ten years.  Is it smart to purchase a life insurance policy to cover this high risk to protect your family or should you gamble with your family's future on the fact that you will live?

This post was reposted from http://finlit.biz/life-insurance/life-insurance-what-happens-if-you-live/, originally written on February 4th, 2013.