By Erica Davis
I’ve run across a few industry articles recently about crowdfunding as a last resort for people who lost a loved one who did not have life insurance.
My curiosity got the best of me, so I visited a popular crowdfunding website and conducted a search using the phrase “no life insurance.” The search provided nearly 30,000 results for people who recently passed away and did not have life insurance - leaving their families in need of financial support to cover final expenses, medical costs and much more.
I revisited the site a few weeks later and repeated the search. This time there were almost 33,000 results. The search results show only the fundraising campaign ads that were created to be available to the public. An unknown number of private campaigns also exist, and they are accessible only to those who were sent the link from the person who created a fundraising campaign.
The fundraising campaign ad descriptions range from deaths resulting from rare diseases to people who are on the verge of dying and can’t afford a burial. These stories can either tug at your heartstrings or break your heart. The donations raised range from a measly few hundred dollars to a whopping few hundred-thousand, depending on the campaign.
Crowdfunding isn’t free
For fundraising campaigns in the U.S., the particular site that I visited retains roughly 8 percent of the donation money received, with the balance going to the recipient. Another crowdfunding site that I checked into skims 10 percent off the top.
On one hand, it is good that those websites and services exist, so that they are available to help people who are in desperate need. But on the other hand, I am a firm believer that people should plan ahead and they should be accountable for their own financial responsibilities.
Crowdfunding should not be used as a strategy for covering final expenses and taking care of loved ones.
I was raised in a rural Iowa town that had a pretty tight-knit community. The population was around 800 at that time, over three decades ago. Everyone knew everyone (and knew their business too).
When tragedy struck, people came together and took care of each other. That’s just how things worked in a small town. If a family had an extreme hardship, or lost a loved one, someone would coordinate an event to raise money for the family. I’ve attended countless silent auctions, bake sales and community dinners to help raise money for people in financial need. I’ve also dropped money into an abundance of collection cans placed throughout the local businesses to help gather funds throughout the years. The community would sympathize with the families’ circumstances and we’d donate what we could.
I didn’t realize it back then, but those were all forms of crowdfunding. Although crowdfunding has existed for a very long time, in one fashion or another, nowadays it is rampant on the Internet.
Growing up, I knew that we were not a rich family by any means, but we never went without what we needed. My dad worked full-time as a machinist and my mom tended bar part-time at a supper club. Though neither of my parents had a college education and their occupations were far from glamorous, had we lost either one of them, our family would have suffered extreme financial pain on top of emotional grief. I always feared that someday my family’s picture and plight might be on the front of a coffee can by the cash register at the gas station, and I hoped we would never garner that kind of attention.
Later, in my teenage years, I learned from my parents that they had prepared to prevent that from happening to us - with proper insurance and financial planning. There were many times when budgets were tight, but my parents always managed to make ends meet and have life insurance in place. As an adult, I followed their insightful lead.
At age 21, I was a single mother, going to college full-time, working part-time and trying to make ends meet on an extremely tight budget. But even then, I knew the importance of life insurance.
I’d rather pay a few hundred dollars a year and sleep well at night knowing that if something happened to me, that the funds were there to take care of my child. Nearly 20 years later, I’m still here and my son is grown up. I know that I’ve thrown away money on some really stupid things over the years, but I will never regret the dollars spent on life insurance and the peace of mind that it provided.
Money can never truly replace a person. But losing a key member of a family is much more difficult without money.
At such an emotional time, the life insurance proceeds can help alleviate financial weights from the beneficiaries’ shoulders and allow them to better focus on their family, themselves and the grieving process. I’ve worked closely with hundreds of advisors over the past 17 years and I’ve never heard anyone say that when they delivered a claim check that the beneficiary complained it was “too much.”
I understand it can be challenging for some people to afford life insurance - I used to be one of them - but those are the families who can’t afford not to have it. They may have to get creative, but they can make it work somehow. Maybe they’ll have to give up drinking a can of soda each day or dine out less often. My parents figured out a way to make it work, and so did I.
Encourage people to do the responsible thing and have life insurance in place, even if their budgets are tight. Life insurance benefits can help someone continue to take care of their loved ones financially, even after they are gone. Because it is their own responsibility - not everyone else’s.
Erica Davis, FLMI, ARA, AAPA, ACS, is a senior marketing specialist at United Life. Erica may be contacted at [email protected].
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