Today, I am participating in the huge Life Insurance Movement in the blogging world that was started by Good Financial Cents.
Our Life Insurance History
When Mr. BFS and I first started out together after college, we did not buy extra life insurance. We didn’t own anything, we had maybe $5000 to our names by the end of the year we graduated, and we had no dependents. It made sense to us to just take the $10,000 policies our jobs provided and move on. We figured if one of us died, the other could afford our cheap lifestyle on our own and the $10,000 would cover the funeral. We left it that way for the next 3 years out of pure laziness.
In 2008, we realized that we had a house, some investments, cash, and were living on about $35,000 a year instead of $20,000 a year. So we each bought some extra term insurance through our jobs to cover ourselves for $100,000 each. That could pay off our remaining mortgage and cover a year of expenses. It cost like $15 a month total, so it seemed more than worth it.
But this year, in January 2012, my husband joined me in self-employment. Seeing as we both need each other to get all the work done, we knew we would need to increase our coverage to cover all of our mortgage debt, at least 2 years of basic expenses, and the funeral expenses. So we are both covered with a term insurance policy for $250,000 for about $35 a month total.
Why I Think Life Insurance is Worth It
Do I think I’m going to keel over tomorrow or that Mr. BFS is going to die for sure next time he officiates a highschool football game? No. But what if one of us did just die? The other one would be completely screwed.
We don’t have kids, but we will soon own two homes and we’ve split our online ad business responsibilities pretty evenly. So the person left behind needs a little help to allow themselves time to grieve. $250,000 will cover our living expenses for 3-5 years depending on how the survivor continues to live. That should buy the survivor enough time to hopefully take some deep breaths, rebuild their life, and find their stride. Since we’ve been together since we were 18 years old, that would probably be necessary.
Overall, paying a few hundred dollars a year for the peace of mind is totally worth it to me. I would never want my husband or me to have to handle a HUGE loss and be stuck in a financially sucky position too. Did we want to pay a premium for a million dollar policy? No. But we both knew we needed at least 3-4 years of expenses covered if the worst ever happened.
What’s your take on life insurance?