We hear all sorts of real-life stories concerning how people have been affected by having or not having life insurance. In the following story, Ryan and Megan are fictional characters made up of a composite of several of these stories. We are launching a campaign in which Ryan and Megan will be representing many of these stories we have heard.
Megan and Ryan Collins, both in their early 40s, were living what they thought was an idyllic life. As recently as 2006, the American Dream they had long sought had become a reality. The mortgage brokerage company Ryan built over the past ten years provided his family with the lifestyle he always wished for. Their home, which they purchased when Ryan started his company, was worth well over double the $500,000 they paid for it 10 years previously. When Ryan expanded his business to several additional offices, they used some of the equity in their house to finance the expansion. Their three young children were going to the finest private school in the San Fernando Valley, a sprawling suburb of Los Angeles.
Following the advice their financial planner gave them many years ago, Ryan regularly invested in mutual funds in his 401K. His account was approaching $300,000 and if he continued his usual contributions to the plan, they were well on the way to being able to have a very comfortable retirement. As their assets were growing continually, they didn’t see the need to purchase life insurance to supplement the $250,000 policy they had purchased for Ryan when they bought the house. If something should happen to Ryan, they reasoned, they’d have enough assets to get Megan and the children on their feet again.
And then, the economic downturn began. The dream house was now worth about what they had paid for it. However, because they had taken the equity out of the house to finance Ryan’s business expansion, they were now upside down on their mortgage. The funds in Ryan’s 401K were now also worth approximately 50% of their peak value. Due to the crashing real estate market, Ryan’s business suffered huge losses and he was forced to close. He was doing some refinancing so, along with some money he withdrew from his 401K, they would weather the storm. And, weathering it they were, until Ryan’s heart stopped working.
Thankfully, Megan was able to sell the house on a short sale. She and the children rented a modest house in another community. The children had to enroll in public school, as they could no longer afford the private school tuition (in addition to moving away from the area). They would have to live on the proceeds from the life insurance e policy until Megan found a job . She soon learned how difficult it would be in this job market, especially since she had been a stay-at-home mom for last fifteen years.
Megan was now facing the cold reality that Ryan had not evaluated his life insurance needs as his situation changed. Instead of increasing the coverage to protect the growing assets, he made the assumption that, if needed, Megan, could liquidate enough assets to keep the family living comfortably. He didn’t foresee the economic meltdown that was now affecting the whole planet, nor did he reconsider his life insurance needs after the assets were nearly gone. If he had increased his coverage after suffering huge economic losses, the family would probably still be in the same house and the children in the same school.
Don’t let their story become yours. Review your life insurance policies annually and make adjustments to your coverage as needed so your family will be fully protected.
Do you have a similar story you would like to share? Send it to stories@lifeinsure.com so we can share it with our readers. Anonymity is guaranteed, as your stories will be told through the eyes of Ryan and Megan.