Imagine the unimaginable–you’ve died.
In the prime of your life, years before you thought you would, you’ve died. You’ve likely left behind a spouse and children. Of course, they will grieve your loss terribly, but soon after you pass on they’ll be confronted by a harsh reality of life without your financial contribution.
How will your spouse survive and meet the bills? Will she have money to send the kids to college?
Unfortunately, financial considerations crop up soon after someone dies when the funeral needs to be planned.
Life goes on.
If you’re the primary breadwinner, life goes on for your family with much less money, unless you had life insurance in place.
Unfortunately, 30% of Americans have no life insurance. “Of the 35 million American households without life insurance, 11 million include children under 18” (MSN). While dying in your prime is unlikely, it happens every day. My dad died when he was just 38, and my parents were woefully underinsured with life insurance. My mom has struggled financially since he died over 25 years ago.
Why Don’t More Americans Get Life Insurance?
The reasons why people don’t get life insurance are as varied as the person who gives the excuses:
- Life insurance is too expensive.
- I have a health problem and probably won’t qualify for life insurance.
- I don’t know how to go about getting insurance; it’s too complicated.
- I’m not going to die young.
However, if you have a spouse or children who depend on your income, you can’t use these excuses. You need to get life insurance to protect them financially.
Would You Buy Life Insurance at Walmart?
Walmart recognizes the need to have an easy process to buy life insurance and recently partnered with MetLife and launched a new pilot program in Georgia and South Carolina to sell life insurance in their stores.
That’s right; you can buy bread, milk, and now life insurance at some Walmarts.
“‘We believe more people want to buy insurance and be on sound financial footing but they run into so many barriers,’ said Manish Bhatt, senior vice-president of consumer direct business at MetLife. ‘Some don’t want to talk to agents. Some find it confusing. By simplifying it and putting it in Walmart, it will make it easy for people to get started'” (Atlanta Journal-Constitution).
How Does Purchasing Life Insurance at Walmart Work?
Sure, most people don’t think of Walmart as a place to buy life insurance, but maybe this is a way to get insurance to the masses, right? Maybe people will be willing to pick up a policy at Walmart and take steps to protect their family financially.
For people who want to buy life insurance at Walmart, this is how it works:
“The MetLife insurance available at Walmart comes in two coverage options–$10,000 or $25,000–with cards starting as low as $69. The price varies depending on age and the amount of coverage desired. An 18 to 44 year old can purchase a one-year, $10,000 life insurance policy for $69, while a 60- to 65-year-old would get a one-year, $25,000 policy for $429” (Atlanta Journal-Constitution).
Why You Shouldn’t Buy Life Insurance at Walmart
It’s Too Expensive
To an uninformed buyer, $69 for a $10,000 policy for one year may sound like a deal.
However, it’s a rip off. My husband got a 20 year $500,000 life insurance policy for $32 a month, or $384 a year when he was 31. If he had instead bought the $10,000 plan from Walmart, he would have paid $3,450 for equivalent coverage for a year at Walmart. (Multiply $69 for a $10,000 policy by 50 to get a $500,000 policy to come up with the price equivalent.)
The Policies Are Too Small
Let’s be real. Having a $10,000 life insurance policy is irrelevant. That small amount will only cover a portion of your yearly salary or perhaps a few months or a year or two of your mortgage payments. It will have no long lasting effects on your family’s finances.
To adequately insure yourself, you need to take out a policy that will allow your loved ones to invest it. The amount of interest it generates should be enough to replicate your annual salary. These Walmart policies don’t even come close to doing that.
Related: Getting Cheaper Life Insurance
The Term Is Too Short
Buying life insurance on a yearly basis is a scary proposition.
Part of the attraction of buying a 20 year policy is that you’re now protected for 20 years. If you develop cancer or diabetes or some other ailment during that time, your life insurance company cannot revoke your policy. You have that protection for your family for 20 years.
Not so at Walmart.
If you develop diabetes when you’re 35 and you’ve been buying a yearly policy, you’ll be out of luck the next year when you buy your policy. You either won’t qualify because of your health condition, or you will pay a very expensive premium.
In addition, locking in rates when you’re younger helps keep your overall premium lower. If you apply for life insurance at 45 instead of 35, you’ll pay more because you’re older and your chance of dying increases. People who buy life insurance at Walmart will pay more each year instead of benefiting from a locked in rate.
While on the surface it seems like Walmart is offering a unique and important service to their customers by offering life insurance, further inspection reveals that they’re just offering their customers a false sense of security with a very high price tag.