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It's all about that base!

June 10, 2020
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It's all about that base. No, I’m not talking about the song, I’m just trying to clever with words.  If you know me, I try my hand at humor, sometimes it’s not all that great, but it brings me my own joy at times!  The BASE not BASS, that I’m talking about, is building a strong financial base.  The biggest piece I want to help educate on is that while there are things within this base that will share commonality, everyone’s base will look different.  Not everyone is in the same financial situation, so what’s in a person’s savings account, or how much life insurance, disability insurance, etc, all those pieces will look a little different.  The base of a solid financial plan means protecting your largest asset.  Right now, most of you are thinking, well, probably my house.  For some it might be you have a lot of land, or equipment if you farm, which many people that live in my area of the country do.  Some of you, your business might be your largest asset that comes to mind.  While many of these things rank high on the asset count list, the biggest asset that people forget about – is YOU!  YOU are the largest asset in your life.  If you can’t work, if you are no longer here, most times, none of the other assets in life can be maintained.  It’s not true in all cases, because, for instance, someone with land, can rent it and still make money off it, but that’s not the point.  The point is, we need to start seeing ourselves as the asset we are.  We provide for our families, we care for children, adult children, and sometimes our parents.  We volunteer, we give.  WHY ARE WE NOT PROTECTING OURSELVES FROM THE BIGGEST LOSS WE WILL INCUR? 

 How many of you insure your house?  My guess is most of you do.  Why?  Well, partly it’s required by most mortgage companies, but in case it gets burned or damaged and to replace the things that can be replaced.  Simply, I need a roof over my head if something happens and can’t afford to pay off a mortgage and buy a new home.  Good enough answer.

How many of you insure your car?  Again, my guess is most of you do.  Why?  It takes me to work, it drives my kids to school, to daycare, it allows me to travel, and if I get in an accident, it will protect myself and others financially.  Makes sense.   

How many of you insure your cell phone?  While I can’t confidently say most of you do, I bet a lot of you do.  Why?  Answers might range from, well, my cellphone company recommended it, to, well, if I break my phone, I can’t afford to pay off the old one and pay for a new one.  I need my phone for work, my kid needs theirs to call for rides, the list can go on and on in this category.  I’ll be honest, I carry cellphone insurance mostly because I have little kids, specifically a little boy who may or may like to put things in the toilet.  So, the rationale for carrying insurance on our phones is because accidents happen and many of us depend on our phones for communication purposes. 

Let’s break the insurance down a little more and look at the cost of each.  Homeowner’s insurance and car insurance – these numbers depend on how much your home or car is valued at.  If you rent an apartment, condo, or home, it’s a little different as it’s based on possessions.  Cellphone insurance is pretty standard.

Homeowner’s insurance - $1400/year or $117/mo 

Car Insurance – $1200/year or $100/mo

Cellphone insurance - $9.99/mo

To dive into this a little more. The average home in the US costs $247,084 according to a Business Insider article from April 2020.  The average cost of a new vehicle is $36,718 according to cnbc.com article from October 2019.  The new iPhone 11 Pro Max will retail for $1,099 according to Apple.  We are all willing to spend roughly $230/mo to insure items with a replacement value of under $300,000.  Now, I’m not saying this is crazy because quite frankly, most of us could not come up with that kind of money if something happened, it’s part our WHY for having insurance for these things.  Also, most mortgages require you to carry homeowner’s insurance as well as it being required by law to carry car insurance. 

Human Life Value 

         Human Life Value – what is it? How is it calculated?  Why does it matter what my life is worth?  Human Life Value, is the value of your life.  Whether you think you are valued or not, your LIFE has a value.  You earn a wage, you help provide a life with a spouse, you provide for your children or pets if you like them over kids.  This is the part that is usually hard for people to hit reality with.  I don’t own anything or owe anything, I’m worth nothing.  People need to see themselves as an ASSET.  We need to be proud of our accomplishments and we need to PROTECT those that benefit from it.  The human life value of a person making $40,000/year is $1.8M (www.lifehappens.org/insurance-calculator) How do we even begin to replace that amount of money?  Well, remember that $1000 cellphone you so willing pay $10/mo, or that $36,000 vehicle you pay $100/mo to insure?  What if we start making room to insure our greatest asset – ourselves?  What if we put INSURANCE ON OUR LIFE?  Yes, I said it, two of the most avoided words in the dictionary when put as a phrase – Life Insurance! 

But it’s too expensive!  I don’t have debt! I don’t have a family! It’s a scam!

Reality. I’ve seen life insurance work first-hand for people and know that it’s something every person should have.  Why?  Because if everyone had adequate life insurance, many of our debt and financial problems wouldn’t exist.  Well, how do you know that?  My response would be, that family, that just lost their mother to cancer – what would $500K or a $1M have done for them?  Paid off their house? Cars? Paid for college tuition for the kids? Provided at home help while the family adjusts to a new life?  Provide the father the ability to take extended time off from work to take care of a funeral, his family and most importantly, himself?  The family that just lost their son in a car accident.  Might they have been able to come up with the funds, maybe, but what if because of life insurance there is now a scholarship for another student in his school?  How about funds to provide education on vehicle safety?  Or funds to provide better opportunities for others for whatever his passion in life? Life insurance is so much more than the scary notion of “well, if I get life insurance, that means I’m accepting I’m going to die someday”.  No, it means, “when I die, my family is going to be ok.  They are going to get to live and enjoy LIFE!”

My challenge to you all is to reach out to a local insurance agent.  Please don’t go online.  I’m not saying things won’t work out just fine, but isn’t it better if you have an issue, you can call a local number or even go to an office and visit with someone in person?  We’d love to work with you all, but respect that you may have a relationship with your agent. Ask for a quote.  If someone is just giving you the best rate possible without asking a little bit about your medical history, including height and weight, it might not be your best rate.  It’s good to shop around.  That is a perk of Witthauer Financial Group.  We work with multiple carriers, so we can find options that fit your needs and your budget.  If you have questions or concerns about life insurance, please reach out.  We want you to ENJOY life and KNOW that your family will be taken care of.