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The Value of Life Insurance

The Value of Life Insurance

September 19, 2023

Did you know that in 2022, 43% of working-age adults were inadequately insured? The sad truth is that key findings from LIMRA reveal that 1) Individuals recognize the fact that they are underinsured and 2) Individuals believe life insurance is much more expensive than it really is.

We all understand the value that life insurance can provide for yourself and your loved ones; unfortunately, misconceptions surrounding the affordability, keep many people from getting the coverage they actually need. 

September is Life Insurance Awareness Month (LIAM), so let's look at a comparison of life insurance versus iPhone insurance to see which insurance provides the better long-term value. In this scenario, we are going to be looking at a newly married young couple (Female 27 and Male 29) who have recently purchased the latest iPhone 14 Pro.

Life Insurance vs. iPhone Insurance: A Comparison

For background information, the monthly insurance cost for each phone through AppleCare+ is $13.49, covering screen damage, accidental damage, and theft, with varying deductibles. The average cost of the iPhone 14 Pro is approximately $1,250.

 What percentage of young adults purchase the insurance and pay $13.49/month to insure an item originally priced at $1,250? What's the value of the phone after 1 year? 2 years? 3 years? Does the monthly insurance cost drop as the value of the phone drops? What's the average time someone keeps an iPhone?

 We can assume the couple were to keep the phones for 3 years, they would have paid $485.64 for each phone never worth more than $1,250. This amounts to 38% of the total value of the phone and raises questions about the financial wisdom of such short-term insurance on an item that is typically upgraded every few years.

 Now, let's shift our focus to life insurance, which offers financial security for the long term. Assuming excellent health, a 29 year old male can purchase $250,000 of 20-year term for less than $13/month.  And it's not just an outlier carrier offering that rate but eight (8) quality carriers, with conversion options, offering these rates (including a carrier that has an electronic underwriting process where 67% of the policies are issued without medicals in 24 hours).

 For a female, age 27, she could purchase $300,000 of 20-year term for less than $13/month and choose from ten (10) different, quality carriers, including the fast underwriting carrier mentioned above.

Is Life Insurance Worth it?

While the decision to purchase iPhone insurance ultimately depends on an individual's needs and preferences, it is important to be aware of the costs involved relative to the item's value and depreciation. Life insurance, on the other hand, offers an outstanding value proposition, especially for young adults who can secure substantial coverage at an affordable price. It ensures financial peace of mind, and not just for the short-term life span of an iPhone, but for the long-term well-being of one's family, making it a valuable investment in the future.