Crowdfunding Is Not a Replacement For Life Insurance

 Crowdfunding can provide some financial assistance in times of need, but it is not a reliable substitute for life insurance due to several critical reasons:

1. Uncertainty of Success
Crowdfunding campaigns rely on public goodwill and donations, which are unpredictable. There is no guarantee that a campaign will raise the needed amount.
Life insurance, on the other hand, guarantees a payout to beneficiaries as long as the premiums are paid and the policy is active.

2. Timeliness
Funds from a crowdfunding campaign may take time to accumulate and disburse, which can delay access to critical financial resources. Life insurance benefits are typically paid quickly after a claim is approved, providing immediate financial support to loved ones.

3. Coverage Amount
Crowdfunding campaigns often fall short of raising significant amounts of money. The average campaign does not cover long-term needs like mortgage payments, children's education, or ongoing living expenses. Life insurance policies are tailored to provide substantial coverage based on the insured's financial responsibilities.

4. Burden on Loved Ones
Relying on crowdfunding shifts the financial burden onto family, friends, and strangers. It may cause stress or feelings of obligation for those close to the deceased. Life insurance ensures that your family and dependents are financially secure without needing to rely on external help.

5. Emotional Strain
Organizing and promoting a crowdfunding campaign can be emotionally draining for grieving family members. Life insurance avoids this by providing a straightforward financial safety net.

6. Cost vs. Return
Crowdfunding success is uncertain, and platform fees can reduce the final amount received.
Life insurance is a structured and cost-effective way to ensure a guaranteed payout in exchange for regular premium payments.

In short, while crowdfunding can help in specific situations, it is not a reliable, comprehensive, or fair replacement for the financial security provided by life insurance. In many cases a Life Insurance policy less money than some people pay for their daily coffee or latte.

Visit our website, give us a call (708) 390-0244 in IL and MI, (239) 899-6044 in FL or send us an email to [email protected] for a complementary insurance needs analysis. 

- Frank Gatto,  Senior Account Manager/Broker - AAIS