When we daven Nesana Tokef each Yom Kippur, we recite, “Mi yichyei u’mi yamus – who will live and who will die.” We do not know what the judgment will be, and we pray for a year of life and health. But other than davening to Hashem, what else can we do?
Over the last 40 years, the Baltimore community
has helped many widows, divorced woman and their children, and orphans after they
have unfortunately lost a loved one and there was no plan to replace the lost parnassa that the deceased had been
providing for the family. I have been involved, too often, in helping raise
these needed funds. Many millions have been raised, and tzedakahs like Sister to Sister ( helping divorced woman only),
Avigdor’s Helping Hand, a New York-based tzedakah
organization, and our local Ahavas Yisrael Charity Fund have provided tzedakah to these mishpachos. Rabbi Boruch Brull, the executive director of Ahavas
Yisrael, has been at the forefront of many of these efforts.
I am a big
believer in buying insurance that will protect you and your family. I am not a
professional financial advisor nor an insurance broker. I am a conservative
businessman, and many people come to me for financial counsel, which I am happy
to give, using my extensive life experience as a guide.
All insurances are
important: health, disability, homeowners, car liability, life insurance, and long-term
care. Let’s take a look at life insurance. I have purchased and studied many
policies over many years. I also administer the Finkel Family Mechanchim
Baltimore Insurance Fund, which provides term life insurance to over 170 limudei kodesh rebbes, teachers, and administrators of the schools Mr.
Finkel chose. This fund was started by philanthropist Sidney Finkel, z”l, of Baltimore with the counsel of
Rabbi Herman Neuberger, zt”l. Mr.
Finkel handed me a check for one million dollars to endow this project. How
very important and wonderful such a project is. But even with this program in
place, mechanchim still need to
purchase more term insurance to properly insure their mishpachos.
From Day One
When a young bachur takes a wife, he takes on a
financial responsibility. Marriage means he needs to provide for the well being
of his kallah now and in the future.
Whether he learns in kollel or is in the workforce, there should be a financial
plan in place from day one. That plan needs to include some meaningful life
insurance. In fact, I believe one should not go to the chupa without a life insurance policy in place. I urge all mesadrei kiddushin not to perform a chasana
until term life insurance is in place.
The goal of life
insurance is to protect your spouse and children if one passes away, chas v’shalom.
(If the wife is a significant source of income for the family, then she should
carry insurance as well.) Therefore, make sure you have ample insurance at
least until all your children have left home and gotten married. Even then, the
wife will need insurance proceeds, especially if she is not working.
So, when do you
insure? And how much coverage do you need? My recommendation is to take out a
minimum of $300,000 of term insurance at the time of marriage and to add
$300,000 when each child is born. Some policies have a rider that allows you to
add to your insurance automatically, without a medical exam, upon the birth of
children or other occasions. If one purchases a home, he should take out
additional coverage to pay off the outstanding mortgage. Take out insurance to
cover children’s tuition for the future as well as all debts that you may incur,
such as car payments.
Life Insurance Options
There are
different types of life insurance. The least expensive option is term insurance. With such a program, the
insured carries a specified dollar amount of insurance at a fixed price for 10,
20, or even 30 years. Like car insurance, the policy has no cash value. The benefit
is only paid in the event of death. The AARP
Bulletin of October 23, 2023 has an excellent article on “Seven Things to Know
about Term Life Insurance.” It explains different types and options of term
life insurance and explains benefits you need. I highly recommend reading this
article.
The other type of
life insurance is whole life or
universal life. This type of policy is more expensive, but it can last a
lifetime – it usually does not expire if properly funded – and it builds cash
value. That means that a part of your premium is deposited into an
interest-bearing savings account that grows tax free. The cash can be accessed
for various purposes during your lifetime, and the death benefit is paid upon
death. This insurance is for more well-to-do people who can afford the
premiums.
Term is best for
most people.
I think that one
can start with a 10- or 15-year term policy that allows you to take out a new
term policy when that policy ends. At that time, you will be in your 30s and
hopefully still healthy, so that coverage will still be affordable. You can buy
a new term policy, or you can look at universal life policies and other
permanent insurance options.
How to Buy Life Insurance
In your search to
purchase term insurance, start by visiting websites like Term4sale.com,
SelectQuote.com, or Policygenius.com. There is also a Jewish site, www.bseferchayim.org.
Before deciding on a policy, check with a local insurance agent or broker to figure
out which policy fits your needs. An experienced agent is very valuable in helping
you to pick a good policy. If you can afford whole life, consider that. Or, it
may be wiser to take out a larger term policy for a 30-year term, if it is
financially feasible. If your employer has a life insurance program, take a
good look at it as a group policy may give you excellent coverage at a good
rate. Also, make sure you are dealing with an insurance company with a strong
financial rating. A very knowledgeable insurance agent will also help you
review old policies, especially universal and whole life policies. This is
important because the age of policies and interest rates can affect the
duration of benefits and premiums.
Keep in mind that the
time to buy insurance is when you are young and healthy. The younger you are,
the cheaper the rate. High blood pressure and diabetes, which people
unfortunately often acquire as they grow older, will increase the rates
dramatically. Sometimes, it is not even possible to get insurance if one has
had a serious medical condition.
The Day After
How much would a
family receive in the case of the death of the policy holder? Let’s take as an
example a family with four children with $1,500,000 of insurance. If this
amount is conservatively invested at a four or five percent return per year, it
would possibly yield about $50,000 to $65,000 yearly. Even with social security
death benefits, this family will still have a very difficult time managing.
Insurance helps cover basic needs, but we all deal with tuition minimums, prior
debts, and making chasanahs for our kids. It’s important that life insurance also
cover the outstanding mortgage to ensure that the home is not lost. So, such a
family should take out a minimum of $300,000 per family member if possible.
As I mentioned
above, there are three wonderful charities to help if chas v’shalom, there is a
need. In Baltimore Ahavas Yisrael – along with Avigdor’s Helping Hand, a
charity we work with, and Sisters to Sisters (helping divorced women) – helps
widows and yesomim in dire need. As a
volunteer with Ahavas Yisrael, I am willing to discuss the information
presented in this article with anyone who has questions. I can give common
sense advice and point one in the right direction for professional advice.
Eli W. Schlossberg is businessman
and trustee of the Ahavas Yisrael organization. He is a frequent contributor to
the Where What When and
the author of the books, My Shtetl Baltimore and Take a Walk through my
Shtetl. He can be reached at 443-621-0298.
