Life Insurance: I’m not lucky – we planned ahead

I cannot emphasize enough the importance of having life insurance.  A few days after Jim was diagnosed with cancer, he started reviewing our finances.  It was a huge relief for both of us to find out we had actually planned well.  Sarah and I would be ok.  But, our planning had just been on an Excel spreadsheet which included “guesstimates.”  We probably should have enlisted a financial planner.

At the very least, get term life insurance.  (Suze Orman and Dave Ramsey agree with me on that.)  It’s the cheapest and it covers your butt – to put it nicely.  If you want to also use it as an investment, get whole life, but it’s more expensive.  I’m a KISS (keep it simple stupid) kind of a girl, so the other types of life insurances aren’t for me just yet.  The following website Insure.com explains the various kinds of insurances rather well.  (I’m not advocating using the company, I just liked their article the best of the several I read.  But, I have read it is better to go to an insurance “broker” rather than directly to an insurance company.)

The idea of you, or the one you love, dying is something that is incredibly hard to think about.  So do it (life insurance, wills…) for a week or two, and be done with it.  Things to think about for enough life insurance: replacement income (for how long); other sources of monthly income – now and in the future; current savings – liquid and retirement (still need to be able to save…); money for college; paying off a business, mortgage or other debts; Social Security coverage (That little brochure you get in the mail annually is pretty accurate.) and probably a few other things.  I cannot over-emphasize the need to know you will be financially ok if something does happen – before it happens. 

Here’s something else to think about.  I’m still waiting on one of the life insurance checks – almost two months later.  I was lucky enough to have family members pay for Jim’s funeral and memorial costs.  But, there was lag time between Jim’s last paycheck and Social Security kicking in, so I had to dip into our rainy-day funds.  We had unusual expenses during Jim’s last few weeks, and of course odd expenses after he passed away too.  Be sure to have enough liquid assets, so you don’t go into debt during this time.  Personally, I would advise being able to burn through two months of savings, plus between $10,000 – $15,000 for the funeral/memorial costs. 

Between Jim and I tending to be over-planners and my experiences with people dying, we knew to be prepared for this.  I will not have to change my standard of living and I am able to stay home with Sarah.  (At some point, I will probably work in some form or another, but that was the plan anyways.)  I will admit though, the one thing not checked off on my pregnancy to-do list was increasing our life insurance.  So, no new mini-van right now – I’m ok with that.

Next topic: Getting organized