Issue #82: What Taylor Swift taught me about life insurance

February 24, 2021 // ISSUE #82

Hi y’all —

Have you heard the Taylor Swift song “no body, no crime”? It’s excellent. The lyrics tell a gripping story: A woman discovers her husband’s infidelity, the husband kills her after a confrontation, and Taylor and her pals exact revenge. It’s a country Chicago; an updated version of “Goodbye Earl.” Plus it features Haim.

Taylor, obviously, is known for her bridges. “no body, no crime” has a particularly killer one. While discussing the adulterer’s murder, she sings...

Good thing my daddy made me get a boating license when I was 15
And I've cleaned enough houses to know how to cover up a scene
Good thing Este's sister's gonna swear she was with me ("She was with me dude")
Good thing his mistress took out a big life insurance policy

I love this song, and I can’t wait to see it performed IRL at some sort of Folklovermore hybrid show as soon as concerts come back.

But it does make me wonder about life insurance. After listening to “no body, no crime,” I have a ton of questions, and I feel like Taylor would want me to seek the answers. (I’m also now a little afraid of her.)

So, in the Swift spirit, I’m going to investigate. As a single, relatively young woman, do I need life insurance?

I contacted Faisa Stafford, the president and CEO of insurance nonprofit Life Happens, for background. Stafford told me that life insurance is a contract between a firm and a policyholder who pays regular premiums. If/when the policyholder dies, the firm gives their beneficiaries money to make ends meet.

Stafford said policies “can cover virtually any type of expense,” including funeral costs, housing, food and so on. Two other big problems are typically replacement of income to the deceased’s family and elimination of debt in the event of death. It sucks to think about, but how would my loved ones fare financially if I weren’t around anymore?

The timing is tough, too. Nate Schelhaas, vice president and actuary of Individual Life at Principal, explained that the best time to buy life insurance is when I’m young and healthy — even though I (hopefully) won’t need it to kick in until I’m older. The younger I am, the less risky I seem to an insurer. The opposite is also true.

“If you wait ’til you’re sick or dying, it’s too late,” Schelhaas adds.

Doctor: You have 17 different blood infections from trying to hug that raccoon.

That’s because underwriters use risk to determine rates. The amount I pay for life insurance is tied to factors like my age, gender, job, health status, driving records, smoking habits and prescriptions. In non-pandemic times I’d have to get a medical exam with blood and urine tests, though there are some costlier policies that allow me to skip this.

OK, great (and gross). But how do I know if I even need it?

It’s obviously a personal decision. But Stafford did suggest that “an easy way to know if you need life insurance is to consider if someone would suffer financially if you were to pass away.” If the answer is yes, she says, “then you need life insurance.”

There are two major types of life insurance: term and permanent. What they are is in their names. Term life insurance has a specific time period associated with it. I’ll pay for, say, 10 years, and if I’m still alive when the decade is up, my coverage ends. Permanent, or whole, life insurance can stay in place forever as long as I meet certain criteria.

As far as deciding whether to sign up, Schelhaas recommended I check in with myself about it at least once a year. It’s not a bad idea to consider it whenever I tick off a new milestone, as well.

“Buying a house, getting married, having a kid — those are some of the big life events that cause people to step back and say, ‘Hey, my situation has changed. This might be a time to update my financial plan,’” Schelhaas says. “And one of those things could be purchasing life insurance.”

It’s not super expensive. For someone who’s 30 and healthy, the cost of a $250,000 term life insurance policy shakes out to about $160 a year. That’s $13 a month. And if I don’t have a spouse or child, I can always set someone like my mom as my beneficiary.

With the basics under my belt, I asked about the “no body, no crime” situation. Stafford explained to me that, like with the mistress, it’s possible to take out life insurance policies on other people. In addition to having some sort of relationship with that person, I need their consent.

“Life insurance companies also require that the relationship passes the ‘insurable interest’ test, which means demonstrating that the insured's death would have an adverse financial impact on the person who wants to purchase the policy,’” she adds.

Usually this means friends, business partners, spouses or parents. But with Taylor Swift, you never know.

THE BOTTOM LINE

(but please don't tell me you scrolled past all of my hard work)

Because I don’t currently have a ton of people relying on me for money, I probably don’t need life insurance. But it’s not a bad idea for me to look into it now, because the rates are cheaper when I’m young and healthy.

When evaluating various insurers, Schelhaas said I should ask myself how long the company has been around, what its financial strength is, and whether I’ve seen negative headlines about its rates changing. I may also want to consult a financial professional (or, y'know, Money).

It doesn’t have to be a costly endeavor.

“Start small if you don’t know what to do,” he says. “You don’t need to go out and get a million-dollar policy right away."

And so we are all connected in the great circle of life.

via GIPHY

RECEIPT OF THE WEEK

via Instagram

It warms my heart — pun intended — when I read about stars giving to people in need. After last week’s winter weather disaster in Texas, I looked for the helpers and found several, including Tim Cook, Bless Austin, Dak Prescott, Matthew McConaughey, Michael Huff, Pierre Desir and Kacey Musgraves. The Lone Star state is not alone.

INTERNET GOLD

five things I'm loving online right now

1	Breaking news: iPads can recognize muffins now.
2	This roundup of the 25 greatest art heists of all time is fascinating. I particularly loved the description of a 2003 incident at the Whitworth Art Gallery in England. “Thieves broke into the museum and stole paintings by Paul Gauguin, Pablo Picasso, and Vincent van Gogh, and stuffed them into a cardboard tube, which they then planted in a rundown toilet about 650 feet from the Whitworth,” the article reads. “(The British press later dubbed that lavatory ‘the Loovre.’)”
3	Bear in river.
4	I don’t know what’s wrong with me (no I am not taking suggestions) but I can’t stop listening to the 2002 song “Brokenheartsville” by Joe Nichols. Certified banger.
5	No thoughts, head empty, just thinking about this beautiful corn.

401(K)9 CONTRIBUTION

send me cute pictures of your pets, please

via Cheryl Fiorillo

Meet Coco, a puppy who is considering a life insurance pawlicy to provide for her beneficiawwwries.

Now playing: “Gasoline.”

See you next week.

Julia

P.S. Last issue on repairing credit inspired some great replies! Scholar Sharon suggested using and paying off credit cards constantly, which keeps your account active but without a balance. And Scholar Maggie testified firsthand to the effect a credit report error can have on a score: Disputing a missed payment her husband mistakenly had from 2017 saved them almost $200 a month on private mortgage insurance.

P.P.S. Do you have life insurance? What’s your favorite breakfast pastry? Have you ever seen a bear in a strange place? HMU at julia.glum@money.com or @SuperJulia on Twitter. Your comment may be featured here...

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Issue #82: What Taylor Swift taught me about life insurance

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