I have written about the need for life insurance several times, but today I will take the opposite approach. Does anybody actually need life insurance?
After all, up until the mid-nineteenth century, it didn’t exist, for all practical purposes, and civilization progressed just fine without it. However, using that logic, the same can be said about electricity and, Luddites notwithstanding, I don’t hear anybody saying we don’t need electricity.
Of course we benefit directly from electricity and our beneficiaries benefit directly from our life insurance. Unless you count the psychic benefit we receive from providing for our loved ones.
I started thinking about this after reading that Herbert Hoover was orphaned when he was 10 years old, separated from his siblings and sent off to Oregon (from Iowa) to live with an uncle. It wasn’t the ideal childhood, certainly not the way you draw it up, but he didn’t turn out too bad.
It turns out that Hoover was an exceptional individual who surmounted many other challenging situations during his life, so he may not be the best example. What would be the fate of a weaker constituted individual?
In today’s day and age, what would happen if an individual with minor dependents died without life insurance? If there was a surviving parent, that individual would need to develop a game plan for survival. That could range anywhere between doable and impossible, but I think most would agree it wouldn’t be easy.
It could entail starting a GoFundMe campaign, asking for donations in lieu of flowers, leaning on friends and relatives for financial assistance or some other means of getting by. But whatever avenue chosen, it is highly improbable that they would starve to death. It might not be pretty, but they would in all likelihood survive. Who knows, they might even be so constituted so as to thrive, a la Herbert Hoover.
So given the almost certainty that dependents will not starve to death due to a lack of life insurance, is it necessary? Does it make sense to divert resources from one area to the purchase of life insurance? The answer is a personal one and will be answered differently by different people.
Because of the survival factor and the fact that there is a very small chance of death in any given year (at least for young people), it becomes clearer why some people feel it pointless to allocate resources toward the purchase of life insurance that could be more productively deployed elsewhere.
While there is technically no correct answer, most parents feel that life insurance is absolutely necessary for them to accomplish their goals. But I have met people who feel otherwise.