1. Both of us needed life insurance! If my husband were to die, I would need to bury him, replace his income, and provide daycare for our children so I could then work. We also chose to add in the cost of our mortgage so that worry would no longer be a worry. However, if I were to die, we would need to replace my income (I have worked 1/2 time since our first girl was born and still work some), bury me, and definitely provide daycare so that he could continue to work. My insurance is much lower than his. We don't have insurance for our kiddos yet. We may change that in the future but only to cover funeral expenses and then put the rest in education funds.
2. The insurance that our employers' provided was not enough. It did impact our decisions but for example, mine only provided 10K which isn't much more than funeral expenses these days so we had to compensate how much we purchased.
3. We looked around for an insurance agent before we committed. A friend referred us to their ward member early on which got our wheels turning but it wasn't a good match. We felt like he was trying to make a sale rather than provide for our future. My father in law made some changes to his insurance shortly thereafter and referred us to his agent who worked well with us. He made it very clear to us that our goals were 1) risk management or disability and life insurance 2) providing for the future or retirement funding and 3) wealth building. We felt like that was his goal as well, rather than getting us to buy more.
4. It wasn't as expensive as we imagined. One part of the process which we appreciated was a very thorough financial profile. This was both so we could figure out how much we needed to provide for and so that we could figure out where in our budget this would fall. We bought permanent life insurance (it won't go away after the "term" is up) because it made more sense to us but both our parents recommended different things. Love it! :) Now it's drawn out monthly and it's like our 401K where since it's built into our plan, we don't even miss it being there.
5. It's a process. If we magically change financial status and get really rich, we may need more insurance. We have disability insurance for my husband and that may need to change as his career changes and grows. We are so not experts and we're definitely still learning how to be smart with money, but we did find an agent and insurance that fit our family for now and it is a comfort now that it's not just us.
A few more resources:
http://www.360financialliteracy.org/Life+Stages/Parenthood/Articles/Life+Insurance/Life+insurance+basics.htm
http://money.cnn.com/magazines/moneymag/money101/lesson20/
http://www.360financialliteracy.org/Life+Stages/Parenthood/Articles/Life+Insurance/Life+insurance+basics.htm
http://money.cnn.com/magazines/moneymag/money101/lesson20/
4 comments:
thanks for this great information. This is definitely an important part of preparing for the future.
Thanks for taking the time to share all this, Liz.
Thanks for all the info. The only thing that I would add is that it is important to get life insurance for your children. Reasons for this include:
-funeral costs can be very expensive, even for just a child
-if your child is diagnosed with something like cancer, they would be unable to purchase their own life insurance as an adult. (Now I am sure there may be a window of after so many years in remission they would the be able to get it, but I know it isn't easy if it is even possible)
-some life insurances like Gerber will give your child cash back after they reach adulthood if they no longer want to keep the policy.
I know it is something that people don't like to think about, but the cost is minimal. And the last thing you want to be doing if your child were to unexpectadly die is figuring out how to pay for the funeral.
Everyone definitely needs to do what's best for them, but we did do term life insurance. Our thinking behind this was that once we have a great nest egg we won't need life insurance anymore. For example, once we have as much in our 401k as we were insuring then we won't need the life insurance, and the term is much cheaper. Does this even make sense? Again, everyone definitely needs to do what they feel best about--I think the important thing is having it just in case something happens!!
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