I say “blah blah blah” because I’m pretty sure that as soon as I said “life insurance,” you stopped listening. No one wants to read about life insurance. First of all, it’s insurance (which isn’t really so scintillating a topic), and second of all, it kicks in when you die. How much more morbid can you get? Unfortunately, I have a message for you: If you’ve got kids, you should have some. I had a baby in March, and my husband and I are now the proud owners of two policies—one for him, and one for me. And it was easy.
Does it really matter?
If you’re earning money and you’ve got children at home, someone is probably dependent on your income. If you’re a stay-at-home mom, someone would have to pay for child care (among other things) if you died an untimely death. Heck, if you're married and you have a mortgage, your income counts. In any event, your family would probably be pretty inconvenienced, to say the least, if you suddenly disappeared. Life insurance fills that gap, enabling your loved ones to handle funeral costs, a mortgage, and day-to-day expenses.
What kind should I get?
Repeat after me: Level term life insurance. Translation: You make the same payment every year for a set number of years. There are 30-year policies available, but they’re pricey. A 20-year policy is fine for most people. (If you need to re-up in 10 years, it’s not hard.)
How much do I need?
Answers vary, but most experts settle on a number between 5 and 12 times your take-home salary. If your children are tiny, you’ll want to err on the side of the larger number.
How much does it cost?
That’s going to depend on your age, health, and risk. (Are you a recreational skydiver? It’ll cost more.) But I just got a 20-year policy for a sizable sum of money for less than $35 a month.
What do I need to do?
I recommend calling a company like Accuquote.com. They’ll take your information and give you quotes from a number of insurance companies—you choose the lowest quote or the company you like best. You’ll have to get a physical, and then (barring major issues), the policy is yours.
Do you have life insurance? Why or why not?
No, because no debts, no mortgage, no children and no reason. We do have money set aside for funerals etc. Why pay for something not needed? The goal should be to get to the point that life insurance is not needed because you have your estate needs fully covered by savings.
MayT, that’s exactly right. If no one is depending on your income, there’s no reason to spend money on life insurance. And the idea behind a 20-year policy (or 10 or 15) is that after 20 years, you’ll have enough money in retirement savings and otherwise to help your dependents if something happens to you. At that point, you don’t need life insurance anymore.
Great post.
Even if you don’t have kids, if there is no estate plan, e.g., a trust, in place when you die and a probate is required, there are a lot of immediate upfront costs. Having a life insurance policy or accessible cash can be very beneficial in this circumstance.
Thank you for this post. I laughed about the blah, blah, blah part, because it’s so true! I’ve had a life insurance brochure on my bedside table for weeks. Who wants to read it over?
The last time I looked, life insurance for a sizable amount was going to cost us like $200 a month, which was just not an option. I’m glad this is not necessarily true — thanks for providing the resources for getting us started.
Then on to the next blah blah — a will.
Kate,
Thank you for tackling this subject and giving information as to where to go online for quotes and possible coverage.
I must say, like Amy, I too laughed at the blah, blah, blah because that’s exactly how I feel when this topic comes up.
At the same time I don’t want to saddle my grown children with the burden of my burial and other expenses.
I do intend to explore the online site you suggested and I will take action toward getting an appropriate insurance policy for my circumstances and needs.
Your column was just the kick in the pants I needed!
Thank you so much,
Mimi
I’m in the process of changing my life insurance policies right now. I always take out a term policy for every loan I get with my credit union. In addition I have a small universal policy on myself, as do my parents. At the age of 20 I know that this is very important and am already planning ahead. My thoughts are to buy a policy today that has a value large enough for me 10 years down the road when I have a family. This allows me to lock in for 20 or 30 years at a low rate instead of a higher rate when I’m 25 or 30. And if i die tomorrow with no family, my nieces will have over $500,000 to buy their first cars, pay for college, and make a nice down payment on their first homes.
thank you for this timely reminder important words of wisdom. listen up moms!!