This blog is part 1 of our life insurance awareness month series.
As the son of an insurance broker and agent who spent more than a half century in the industry, Chris McMahon witnessed first-hand how even well-crafted plans can come undone. And the high cost of making up for lost time.
When he started an insurance business as a young man, McMahon’s father had the wisdom to take out a $300,000 life policy. So did his business partner, and each served as mutual beneficiaries with the business paying the premiums. But as a succession of partners came and went over the next 40 years, those founding policies somehow lapsed.
“It was a big surprise and not a welcome one,” recalled McMahon, senior marketing manager at EIS. By that point, his father was in his early 70s and his health had faltered in ways that would challenge any man.
“He had a host of pretty serious health issues,” McMahon said. “He had atrial fibrillation. He had a compound fracture that required several surgeries. He had a hiatal hernia, and had his gallbladder removed.”
Though the policies had vanished, McMahon’s mother knew what to do: She went to market and found replacements. Unfortunately, they would not come cheaply. Each had a Table 8 rating, meaning that the couple would pay more than $100,000 in premium over the next 11 years until McMahon’s father passed away in March 2021.
“Even so, those policies paid off in multiples, even at the exorbitant annual rate,” McMahon said. “It allowed my mother and father to have that peace of mind.” But spending that kind of money, he acknowledged, would be a hard decision for many others — especially at post-retirement age.
“A lot of people don’t have the wherewithal to spend that kind of money on a premium and have a policy,” he said. “That’s why you have to do it while you’re young: make it a priority when you can get preferred status.” Consider that since his father was insured at Table 8, he had to pay 200% over standard rates.
Yet he’d also covered his living expenses thanks to other insurance moves that included a Medicare supplement. In February, when he broke his hip, the $367,000 hospital bill for an 11-day stay was essentially covered. Without those policies, the amount due could’ve surpassed $73,000.
Also fresh on McMahon’s mind is the recent loss of a former colleague, who died just weeks after discovering she had a brain tumor. “You know, you can’t see the future,” he noted. “Nobody is immune to death.” And yet, how many of us act to the contrary, even given this universal fact? As McMahon sees it, we just don’t like to think about it, which explains why life insurance too often gets shunted aside.
With some urgency in his voice, McMahon implored those on the fence about buying life insurance: “Do it now. Do it while you’re young. Do it while you can afford it. But even if you have waited too long, that’s not an excuse to not do it.”
After all, McMahon would’ve never envisioned his father being without life insurance in his 70s. Once they caught the oversight, any other couple might’ve deemed it too late to do anything. But not his parents. They knew better and did what was best.
The result? McMahon’s mother — not yet 80 — has a financial cushion that will support her for years to come. Meanwhile, acting on his parent’s experience, he bought a $1 million policy, in part to make sure his 19-year-old daughter gets through four years of college without getting stuck with six-figure debt if something were to happen to him.
Of course, McMahon plans to be around for at least as many years as his father, who was 81 when he passed on. “But it’s incumbent upon me to make sure that I can pave the way for her and take care of the things that I’ve always planned to do — whether I’m here to do them or not.”
EIS is a proud sponsor of a Life Lessons Scholarship organized by non-profit Life Happens.
For more information on to apply for or sponsor a scholarship, please visit www.lifehappens.org/scholarship
Life Happens is a nonprofit organization dedicated to helping consumers take personal financial responsibility through the ownership of life insurance and related products. The organization does not endorse any product, company or insurance advisor. Since its inception in 1994, Life Happens has provided the highest quality, independent and objective information for people seeking help with their insurance buying decisions. To learn more, visit www.lifehappens.org.