Why I have mixed feelings about life insurance
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- When my father died and I received his life insurance, it took me a long time to accept that the money was mine.
- I eventually used it to buy myself an apartment in New York, which I then sold for a profit.
- I have since created wealth through real estate, but I still can’t bring myself to buy my own life insurance.
When my father died about 30 years ago, my sister and I received a large life insurance payout. My sister was still a minor, so my mother oversaw his placement of money with a financial adviser, but I was 19 when he died, which meant I was legally an adult. I was alone with how to handle it.
It was so overwhelming, and I kept it in cash for several years, with the money I had inherited. It was unfortunate, and it took me ages to find a financial advisor.
I used the money to buy real estate all over the United States
The first thing I did with the money was buy an apartment in New York after graduating from college. It made sense to me: I needed a place to live, and the funds stayed there. For $500,000 (which seemed really expensive at the time), I got a nice two bedroom in the West Village, overlooking the Empire State Building.
The moment I signed the paperwork to buy it, my next call was to 1-800-Mattres (“Leave the last S’s to save!”) and I had a bed delivered to the apartment so that I can sleep there that night. I was 23, had an apartment in New York, and I appreciated my dad and the money he left me to get there.
Four years later, I moved to California and sold the New York apartment for almost double what I paid. It was very satisfying, of course. I then bought and sold residential properties in Los Angeles; Vancouver, Canada; and Naples, Florida, before returning to New York and settling there.
My real estate balance sheet is not perfect: I was caught in the housing bubble of 2008 in Florida and saw my property value drop dramatically on my primary residence. Ouch! But overall, real estate has been a great way to invest proceeds from my father’s life insurance policy and inheritance. Property was an investment that I understood, and even when property values went down, I still had somewhere to live, so it didn’t really seem to matter.
I couldn’t bring myself to buy my own life insurance
Today, I am a parent myself. I have two wonderful children who surprise and delight me with their daily brilliance. Now that I’m a mom, I know I probably should get a life insurance policy of my own.
I have a friend whose mother was very careful about buying life insurance, getting a policy large enough that if, God forbid, something happened to her while my friend was still in school, college would still be paid. My friend remembers her mother gratefully reducing the policy (and the premiums that came with it) once my friend had successfully graduated from school. It makes so much sense.
And yet, I have not yet resolved to do so. Even though I see the benefits of this policy in my life, the experience is still wrapped in the pain of my father’s death. I received a lot of money because someone I love died. It’s just… off. It took a lot of emotional labor and therapy (which I certainly paid for using some of the profits) to help me accept that the money was mine, to do as I saw fit.
I guess I could use more therapy to help me do the right thing for my kids…
I’m probably afraid that planning my untimely death may bring it. My family recently experienced a tragedy and I just don’t want to think about the possibility of further trauma.
Sometimes people put off writing their wills because it means facing their own mortality. I know I resisted it until recently. But I learned something interesting from a lawyer who specializes in trusts and estates: some cultures believe that when you write your will, it is an omen of long life. I know I felt relief when I finally wrote a new will in 2020 after postponing it for several years.
So maybe life insurance will be the same. For now, my “insurance policy” is to take care of my body, my mind and my finances. I structured things so that if anything happened to me, my children’s education and lifestyle would be OK. But maybe just writing this will help me change my reluctance to add politics to the mix.
Life insurance was a touching gift from my father. I think I made good use of it. I’m not ready to make this kind of gift a possibility for my own kids just yet, but I’m open to seeing that change.