Motherhood pushes many of us to consider ideas and concepts we would not have otherwise contemplated. This was true for my experience with life insurance. When my husband and I were expecting our first child we didn’t know much about life insurance but we figured it was probably a good idea with a baby on the way. Like my husband and me, many people don’t think about life insurance until they have a dependent. As a soon-to-be mom, the weight of having a complete and utter dependent in my care helped me to reflect on the future well-being of our unborn child under different scenarios and circumstances. Our new child would be completely reliant upon us for survival, but what if something happened to one or both of us? How could we ensure he would be cared for as we desired? As we considered this, our first step was to ensure the financial means necessary to care for our child’s future: life insurance.
My husband and I were both pretty naïve and uninformed when we bought our first life insurance policy. We met with an insurance agent through a financial organization we worked with at the time. The agent asked a few questions, mostly about our age and health, and submitted our information for a quote. Shortly afterwards, the agent sent us a couple quotes for different term life amounts. All of the quote amounts seemed like a lot of money to us so we closed our eyes and picked one at random, so to speak. We figured all the amounts he showed us were more money than we currently possessed so any of the amounts would suffice.
A couple years after we took out our first policy, my husband switched jobs and actually became an independent insurance agent. Since my husband started work as an insurance agent, we’ve both learned a lot about life insurance. As we learned more about life insurance, we changed our insurance policies to reflect our family’s needs and desires.
The first and most important thing we discovered was that having an informed and caring agent matters. Our previous experience with life insurance was more about a sale than really finding the right fit for our family. Even though I’m married to an insurance agent now, I can still become bogged down in confusing terminology. Find a good agent who will actually take the time to explain life insurance to you. A good agent will get to know you and your family. Different families have different means, needs, and lifestyles, which can affect the type and amount of life insurance needed. By asking the right questions a good agent can help you determine what is best for your family.
Here are some things you might consider when purchasing life insurance:
1. Debts
When buying a life insurance policy you will want to consider how much it will take to pay off your debts.
2. Future Obligations
You will want to factor in future obligations if you wish to help provide for future expenses such as a child’s education.
3. Income Replacement
One of the most determining factors for life insurance is the amount of income you will need to replace for what length of time.
4. Routinely Reevaluate
It is a good idea to routinely revisit your life insurance needs with your agent, especially after a major life event (such as an addition to your family, a divorce, or a career change).
Below are some myths about life insurance:
1. Only breadwinners in a family require life insurance.
Initially our family only bought life insurance to cover my husband because I planned to stay home. Once my husband became an agent, we realized we didn’t have the right coverage. The cost of replacing a homemaker can be quite expensive when you consider cleaning, cooking, and childcare costs.
2. If I have insurance through work, that’s enough.
Many work places will provide life insurance policies up to two times an annual salary. This might be fine for a single person without dependents, but in most cases it is inadequate for a family. Also, it is good to remember that life insurance through a work place is only valid as long as you continue to be an employee.
3. Life insurance is a hassle and expensive.
Many life insurance policies are reasonably priced. And many companies will allow you to receive your physical for life insurance in the convenience of your own home or work. Some life insurance plans can be dropped almost immediately if the needs of your family change.
***
Life insurance may seem superfluous to some, but it is very near to my heart. After our first son suffered many medical aliments in his first year of life, I wanted to know that he would have the means to continue to be well cared for financially if something happened to me or my husband. If you are a mom, I urge you to consider how you can ensure your family’s future well-being, through your own assets and/or through life insurance.
If the unthinkable were to happen today, would your child’s future be financially secure?
Disclaimer: All thoughts expressed in this piece are the opinion of the author. An insurance agent can help you better understand your specific insurance needs.
I was like this, clueless about life insurance and what policy I should choose if any. Until my insurance agent (Erin Capps @ Capps Insurance Agency) talked to me about it. To get the right amount for our family, she told me what items we should think about as you listed above and helped me get what we needed. You really do need someone knowledgeable – without her, I wouldn’t have known what to do. It’s really important. Great post!
This is such a hard topic to think about but so important. Every time we have reevaluated our life insurance needs, I cringe; but I’m so thankful that we’ve done the hard thing by facing the “unthinkable” and planning for it. We are currently taking Dave Ramsey’s The Legacy Journey class, and that, too, is helping us to think through these things. Great post. Thanks for addressing a difficult topic.