If you are anything like me, you are probably quite sick of reading blog posts on insurance. There are only so many ways that people can list the pros and cons for buying a policy and the benefits that come with it.. right? Quite frankly, I believe that lessons are better learned through hearing about and experiencing real life situations; personally, I am far more likely to take action on something after hearing about a bad experience than a ‘what if’ or ‘worst-case’ situation!
I have discussed the consequences of dying before in quite a great detail, but today want to tell you three tragic tales. Real-life examples of why thinking about the worst case scenario is definitely a necessary part of life.
Case 1: Sarah Burke (Daredevil)
Some of you may have already heard of Sarah Burke. Sarah was an X games (action games) superpipe skiing champion and was extremely influential. Sarah was equally as dedicated to skiing off the piste and actually managed to get the half-pipe event through the Olympic Committee and scheduled to be an event in the 2014 Winter Games. Tragically, at the start of 2012 one of Sarah’s tricks went badly wrong and she landed on her head, before going into cardiac arrest. Unfortunately she went into a coma and died after a failed attempt at brain surgery.
As if this wasn’t bad enough for her family and friends to contend with, her husband was faced with almost half a million dollars in medical bills to cover the cost of airlifts, operations and other care. The bill was later reduced to approximately $200,000, which was not covered by her sponsors, due to the fact she was training and not competing at the time.
Thankfully, a campaign from her fans managed to raise almost $250,000 towards paying the medical bills and other costs. Others in the same situation have not been so lucky.
Case 2: Jermaine Edwards (College Grad)
In this example, a 24-year old college kid Jermaine Edwards tragically passed away due to natural causes. Similar to the above case, not only did his mother Ella have the impossible task of burying her own son, but upon his death, she had also become liable for the college debt that she had co-signed a number of years back.
At 61 years old, a poor and grieving mother started to become hassled by debt collectors; hungry to be repaid. Ella started a petition at change.org to have the debt cancelled and managed to obtain 191,000 signatures. Again, this story has a slightly happier ending in that the loan was eventually forgiven. Not everyone has the same experience and there are only so many times that people are going to sign a petition.
Case 3: Chris Philp (From Rags to Riches)
Growing up, Chris had it all. Expensive vacations to Hawaii staying in the best hotels, a month in Maui learning to Scuba Dive. Chris had a very lavish lifestyle and lost it all when his father passed away suddenly, without savings and without life insurance. Chris was unable to go to college as he had always planned and his life changed in an unimaginable way.
Fortunately, Chris was able to learn from this experience and as a result now works to teach people in offering advice on similar situations. In different circumstances this could be (and often is) a very different story.
While all these stories have somewhat positive outcomes, I hope they are food for thought.
Debt and Your Estate
The law varies slightly depending on which country you are residing in, however the principles are largely the same. If a person dies and is in debt at the time, these debts are recoverable from their estate. In a situation where your name is on the title deeds of property, this is deemed part of your estate. My point is that if you die and are in bad debt, the debt collectors will start by recouping what is owed to them from the equity in your house. This alone could leave your partner / children / family in serious trouble.
If this post has made you think twice about dying; good! You can get Life quotes from lifeinsurance.org.uk and a variety of other sites. You are never too late, as Lifeinsurance.org.uk offer life insurance for over 50’s too.
Make sure that you have a plan and this plan is dynamic to meet your constantly changing situation.
What is your situation? If (heaven forbid) you didn’t wake up tomorrow, would you leave a mess behind?
This post definitely does point out that anything can happen at any time. The smart ones prepare for that in order to care for their family. We set our wills & living wills about two years ago and our insurance is in fairly good shape. Thankfully we have a rider that pays off the house if something were to happen to my wife or I or both. That way all the insurance can provide for the family.
John S @ Frugal Rules recently posted..How to Slash Years Off the Life of Your Mortgage
Not surprised to hear that you have a backup plan in place John – good for you. I have a policy that pays out about £150k in the event of my death.
My girlfriend and I own our house jointly, and with that came a joint mortgage. Right now we do not have wills, or life insurance, but we know we should – at least get life insurance. It sounds stupid but it seems too depressing to even look around for it!
Jon recently posted..Free alternatives to cable TV
It is indeed depressing, but it is Cheap to get while you are young! Also, you just never know – it is peace of mind for sure 🙂
Great post. I love that you put real life cases into it so that it was more relatable. It was SUCH a huge story here in Canada when Sarah Burke died. People were extremely upset!
Gillian @ Money After Graduation recently posted..November 2012 Spending Recap
Thanks Gillian! We heard about Sarah Burke in the UK, but the coverage was limited. She seemed like a very inspiring woman! 🙂
I hope this post will help change some people’s minds, but unfortunately most of us have life insurance already. Maybe there are a few readers out there that haven’t taken the responsible step yet…
Jason @ WSL recently posted..Overcoming Murphy’s Law – Our Journey out of Debt
Most of us do… a LOT still don’t! I will be happy if even one person buys it after reading this 🙂
Tragic indeed. It makes me feel fortunate I live here with a free at the point of use National Health Service, although I really should look at getting life insurance now I have a family.
As a fellow UK citizen though, what happens to a mortgage if you die halfway through? Will they try and redeem it, or if the payments are kept up by any surviving partner, leave it as is over the contract term??
Matt@LiveWellOnLess recently posted..Reaching My Target
Hey Matt – I agree, we are fortunate to have the NHS, but this also emphasises the need to take a travel insurance policy out when going abroad. As far as I am aware (no expert on this), the mortgage company will assess if you are able to pay the mortgage on your own (or the partner) before allowing it to continue automatically. For those that do have life insurance, this normally goes straight towards the mortgage debt and either clears it, or makes the payments far more manageable. Definitely something to look into! 🙂
It’s sad and crazy that Sarah didn’t have life insurance. Everyone who has a spouse or dependent should have some type of insurance until they are wealthy enough to not need it.
Justin@TheFrugalPath recently posted..Co-signing: A Path Best Avoided
Glad you agree 🙂
Everything is clean! The poor mum repaying a dead son’s student loan is terrible. There should be a clause for death in the contract, it is not bad faith of the kid not willing to repay for his education!
I totally agree… Perhaps this will change in time.
Luckily for Sarah Burke she had a huge fan base and some very generous donors! The rest of us would have had to rely on a life insurance policy (if we had one). Most likely, Sarah would not be insurable because of the risky athletic activity she participated in.
David Landen recently posted..November 2012 Monthly Income Report
Absolutely! It is a testament to the kind of girl that Sarah was I think. Unfortunately the other 99% of us do not have the same exposure and would not have the support.
It sucks when people die and do not have life insurance. I see it at work almost every day at the mortuary.
Holly@ClubThrifty recently posted..How Much Money Is Enough?
Man that must be a slightly depressing thing to see 🙁
Something I still haven’t done yet but I also wanted to add the importance of everyone looking into Disability Insurance – in some way suddenly becoming disabled could be worse than the affect your death may have on your family/dependants. You might not be able to provide an income from work, and your health expenses would go sky high too.
Jon recently posted..Free alternatives to cable TV
We have quite a bit of life insurance. It is really a bummer to put it in place and think about why you might need it, but it helps me sleep better at night.
Kim@Eyesonthedollar recently posted..Can’t Take My Eyes Off These Blogs #17-Game Of Life Edition