My Personal Life Insurance Journey
This post is part of the TermLifeInsurance.com blog tour, which helps spread awareness of the importance of providing financial security for your family. September is Life Insurance Awareness month, so learn more with LifeHappens.org and how life insurance can protect your family and your finances.
My Old View Life Insurance
I have to confess that I used to think that life insurance was a waste. I remember signing up for my employee benefits every year, seeing the option to purchase additional life insurance and scoffing at the waste of an extra $20 a month. In my mind, the only need for life insurance was to cover the cost of my funeral should I pass and the basic coverage provided by my employer at no additional cost to me was plenty for my husband with a little extra leftover for my husband and son.It wasn’t until I became a financial advisor and received training in insurance that I began to realize that my life insurance philosophy was not only wrong, but it also could cause tremendous harm to my family. The life insurance that my company provided consisted of a payment of one year’s salary. At the time, this would have amounted to a payment of $100,000 for my husband.
My New View of Life Insurance
This payment would have more than covered the funeral expenses as I expected them to; however, what would my husband do about paying our mortgage? Not only was I the high earner in our relationship, but it also takes both of our salaries to pay the mortgage and the other monthly expenses. I can’t even imagine my husband having to deal with the loss of his wife and his son’s mother, but then having to move my son from the only home he’s known because we didn’t have enough life insurance was just too much for me to handle.This $100,000 payment seemed like a windfall to me; however, how would my husband pay for my son’s college education? We have a monthly payment plan in place to cover my son’s college education; however, this will require the contributions from the two of us over the next eight years, and it’s certainly more than the $100,000 life insurance pay out I used to have.Before my life insurance training, I never thought about the possibility of my husband becoming overcome with grief that he would have to take a leave of absence from work. My husband is the rock of our family; however, no one is immune to grief and you never know how grief will change your life. If my husband had to take a leave of absence from work, the $100,000 payout that I thought would cover all of our needs would not last but a few months with all of the costs and loss of income.Thankfully, I know longer think about life insurance as I used to; and I have made adjustments to my coverage and my husband’s coverage because of it.
Here are the steps I took and suggest:
1) Assess How Much You Will Need
There are a number of tools out there that can help you find out what your life insurance needs would be based on your current and future financial situations; however, I love the app Life Happens. It’s free to use and gives you a great idea of what type of coverage you will need.
2) Research Your Best Options Based on Need
Term life insurance can seem cookie cutter; however, there are nuances with policies and you can actually structure policies to fit your needs. For a basic search, you can use a site like TermLifeInsurance.com to compare options; however, if you think you might need something more complex, you should reach out to a life insurance specialist. Tomorrow on my podcast, I am talking to Joshua Sheats from Radical Personal Finance about some best practices with finding the right insurance for you.
3) Budget Accordingly
No matter how much your monthly life insurance premium will cost, you may find yourself wondering if you can fit it into your budget. I guarantee you that it is a monthly expense you will be thankful for in the long run and you should make sure that it is a budget priority for you and your family.
4) Apply for Life Insurance
Do not wait to apply for life insurance. The younger you are, the better your premiums will be, and the longer you wait, the more you open yourself up to the possibility of a health event occurring that could make you or your loved one uninsurable.
5) Sleep Well at Night
The day I received the email that my term life insurance policy was in place was the best night’s sleep I had in a long time, and I have slept well ever since it went into place knowing that if something were to happen to me, my husband and son would have a lot less worries about their future, and to me, that feeling in priceless.