Thursday, August 8, 2013

Life Insurance-- Not just for the 1-percenters

First, a reminder about our giveaway! Click here to enter and win a $25 Amazon gift card!

Second, long post alert! If you're already on board with getting life insurance, skip the guilt trip (complete with pictures) and go directly to the "How Much" part and read from there. Or if you don't have children and/or would be financially okay if your spouse passed away, feel free to ignore the whole post since you might not need life insurance.

In general, I feel like my life is pretty good. There's nothing outlandishly amazing about it, but Aaron and I love each other, and we love our kid. Basically, we're in that "normal happy" stage of life, where one of us would have to die the next day in a movie to keep things interesting.

Guess who took this picture of us. Lisa. On her iPhone. (We used a different one she took five minutes earlier on our Christmas card.) I think she did a pretty good job! But why do we always forget to take out the stinking binky? 

I don't expect to die anytime soon. And I sure as heckfire (as Lisa would say) am counting on Aaron to not die anytime soon. But sometimes bad things happen to good people, so you can't just not think about issues like life insurance. It reminds me of that scene in To Kill A Mockingbird* where the kids are at Boo Radley's house. They're petrified, so Dill covers his eyes, as if that would solve all his problems. Too bad ignoring things was never a good problem-solving tactic.

Obviously having life insurance doesn't automatically make all the worries go away. But, I'll tell you what--it sure makes some of them disappear (like these):
  • How would we cover funeral expenses? 
  • How would Aaron cover expenses for daycare/nanny or time off if I passed away? (We have a policy on me too, even though I don't bring in an income. It's much smaller than the one on Aaron and relatively cheap.)
  • How would our little one be provided for financially?
  • Would he have the means to go to college?
  • How much time would I have at home before I'd have to start thinking about getting a job again if Aaron passed away? 
I rest a lot easier knowing that, at least financially, we're all (especially this little guy below) taken care of.

Post-nap hair awesomeness.
So we've talked about the why of life insurance. Now let's cover the "how much," the "how long," and the "how."

How Much: This definitely depends on your situation, but I'll tell you what the general rules of thumb are and what we decided.
  • Check out this calculator from bankrate.com. 
  • Generally, people say between five to ten times your annual income (lean towards the higher side if you're insuring a sole breadwinner). We went on the high side because I wanted to maximize the amount of time I'd stay home with my son. 
  • We got a much smaller policy on me, just enough to cover funeral expenses, some time off for Aaron, and daycare for our son for a couple years.
How Long: This question might throw people a little? (I thought coverage was good until you died?!?!) Not with term insurance, which is what is generally recommended. Term is cheaper because you're paying to cover just 20-30 years instead of your entire life. At the end of that period, your kids should be launched (hopefully), and you should have enough savings to cover funeral expenses. I'd say it depends on your situation, but try to get a long enough time period to see your kids through school. If you're planning on having more children, you can always take out another smaller policy. 

How: Okay, not going to lie. Getting life insurance is not a click here, put in your address and card #, and wham-bam you've got life insurance deal. It's kind of annoying. You've got to talk to a broker, answer a bunch of lifestyle and medical questions, have someone come to your house and take a blood and urine sample (and come back a second time if you have super deep veins like me), the whole bit. It's a bit of a process and it takes a while. So here's what you do to get the ball rolling.

Call an agent. They get a pretty fat commission, so they will be highly incentivized to see you through the process. We went through a financial advisor we had a personal connection with, but Dave Ramsey recommends these guys, so they can't be that bad. (Just a warning, if you put in your contact info, I'm sure you will start getting calls, so don't do it unless you're okay with that.)

So do us a favor, Mamas. Get a quote today. Just start the process. And if you're worried about what you can afford, just remember that anything is better than nothing. 

*Yes, I know it was a book first. 

Tell us -- What things do you worry about?




Own it -- Have you taken out a policy yet? Have you thought about it? Are you going to?

2 comments:

  1. I work for a school district and right now my husband is not working while he gets his masters. My employer provides a life insurance policy for me equal to one year of my salary. Is life insurance often part of an employers benefits package?

    ReplyDelete
    Replies
    1. In my experience, it is typical at larger employers to offer some amount of life insurance. It's usually not huge, but could be sufficient depending on your situation (and it's free!-ish)

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