Go Fund Me is NOT a replacement for insurance
“The purpose of this memorial fund is to help them pay for a memorial service and associated expenses.”
“All funds will be used for funeral costs, with anything left over gifted to (Insert Name).”
“We lost our home and all the contents inside.”
“Unfortunately (Insert Name) did not have renters insurance. Most if not all items in the house were either burned, damaged by smoke, or damaged by water. Any help this family can get is greatly appreciated.”
It seems like every time I am on Facebook I run into another Go Fund Me campaign. There are a lot of horrific stories out there. Usually those are the ones I see in my news feed. Which actually, is kind of a shame, since I was just on www.gofundme.com doing research for this blog and just searching Waukesha, WI alone, I got to see some interesting campaigns for things like:
Support for veterans, high school entrepreneurs, people needing surgery for their pets, people trying to raise money for college, people trying to raise money to go on missionary trips, etc.
As an insurance agent, when I see a Go Fund Me campaign in my news feed- I instantly cringe, one- because it usually means that something horrible has happened to someone (and I hate that), and two- because more and more, it seems like the campaigns I am seeing are raising money for things that people shouldn’t need to raise money for.
They are predictable losses. Which means, they are insurable losses.
Translate- this means that I am seeing people asking for money to help a family that is financially devastated because of a loss… a family member…. a fire… an accident…. And if they had just carried insurance (or carried enough insurance)- if they had just planned ahead… they wouldn’t have to ask people for money. AND in almost all of the cases I see, these people who are struggling would come out far, far, far more ahead than the contributions they receive from Go Fund Me. AND they wouldn’t have any fees or tax liabilities on top of it.
Go Fund Me is NOT a replacement for insurance.
I am really afraid that people, especially younger people, think that it is.
Note the sarcasm here: Renter’s insurance? I don’t need it. Instead of paying $15/month to get $30,000 worth of coverage for my contents (plus $100,000 worth of liability insurance and getting a discount on my auto insurance, and other perks)- I’ll just put together a Go Fund Me campaign when I accidentally start a pan of bacon on fire and my apartment burns down. Then if I’m LUCKY and very popular, I’ll get $10,000 worth of donations (that would be amazing, but I want round numbers), which will only pay for a fraction of what it costs me to replace my stuff. Go Fund Me charges a 5% processing fee. The company that dispenses my donations into my bank account takes 2.9%. So at the end of the day, that $10,000 that everyone donated turns into an actual $9,300. Worst of all, since I didn’t have renters insurance- which means I didn’t have any liability coverage, if there was any damage to any neighbors apartments, I’m now on the hook to pay for THEIR stuff- so my less than $9,300 will now actually not even scrape the surface of my bills. I’m still going to have my wages garnished for life and likely have to file bankruptcy.
Note: And if my crowdfunding campaign raised over $20,000 and had at least 200 transactions, they are required to send me a 1099 and I would have to claim the money raised as INCOME on my TAXES!
All because that extra $15/month- the price of two Starbucks or Friday night movie, wasn’t worth it.
In my opinion- part of “adulting” is being responsible enough to have the appropriate insurance. Not only for being able to take care of your own property- but for being able to take care of other people’s property if you should accidentally injure them or their stuff in some manner.
Funeral expenses are the other huge one I see in my news feed. I honestly think this is the most popular campaign on Go Fund Me- and obviously, the most sad. Soap box time- this is the most predictable loss out there. Everyone passes. No one wants to talk about it and preparing for it is no one’s favorite thing to do- but at least with life insurance (permanent life insurance), you know you will get your money’s worth out of it.
People create final expense campaigns on Go Fund Me for $10,000 – $20,000 and hope that they can pay for a funeral and then maybe have some money left over to perhaps pay off some medical bills or leave to a child or spouse. But if you plan ahead with life insurance, you are planning for not only funeral expenses, but things like income replacement for a spouse, education expenses for children, therapy expenses for grief, mortgage expenses, paying off credit cards and other debts. Life insurance can also pay for experimental treatments if you are sick or a bucket list if you are terminal. (I see separate Go Fund Me campaigns just for those!)
A lot of Go Fund Me campaigns are for children who pass unexpectedly. A lot of people don’t think about buying life insurance for their children. Buying life insurance for your child when they are babies or very young- that is the best time. The chances of them having any pre-existing conditions at that point (therefore, being uninsurable), is very low. You lock in a great rate when they are younger. OR- you can just add a child rider to your own policy which should be just enough for funeral expenses. That is still planning ahead.
No one predicts that their child is going to pass on at a young age. It’s horrible to have to bury your own child. It’s more horrible when you don’t have money to pay for a memorial service and grief counseling. Taking care of this with a small life insurance policy when they are very little just gets this out of the way. If you’re looking for more reasons why you may want to purchase a life insurance policy on a child, please see the blog I wrote last September. It lists 15 reasons why you may want to consider life insurance for your child.
There are a lot of campaigns on Go Fund Me that I totally understand- and don’t take this post the wrong way and think that I’m being disrespectful to any family that has gone this route- because I’m not. Sometimes you have to do what you have to do. There are a lot of situations like medical treatments, charitable organizations, and business ventures, etc that crowdfunding is a great fit for. Plus- at the end of the day, I’m not here to judge anyone- I am just trying to offer what I think is a better alternative to people.
As far as crowdfunding in general goes, most people don’t realize that Go Fund Me has a significant fee structure. Most of the crowdfunding sites online have similar fee structures- they have to make a buck; they are businesses after all. When I googled Go Fund Me to look at their reviews, I came across this site which had some scary information on it with some people who claim they couldn’t get their money that people donated, etc. It might be better to set something up with a local church, where you can donate and they will pass on the money. Or if you want to help a family in need, you could give a donation directly to the family in cash.
If you are interested in crowdfunding for a campaign, here are many of the crowdfunding sites ranked by fees.
As always, if you are interested in more information on life insurance or home/renters/condo/auto (or any other kind) insurance, we are always here to help!
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