This topic has been on my mind a lot lately for two reasons. One, Joe and I just transitioned our life insurance policies over to another company so we've been discussing the topic frequently. Two, I've heard of so many people passing away lately and not only are their families left behind, mourning the loss of their loved one, I've often heard mentioned the financial burden that they are left with at well. (This paragraph was originally written in 2017 but still holds true.)
For a long time, I thought of life insurance as something that only people a lot older than me, like 50+ needed. Once I really took the time to learn about life insurance, through listening to Dave Ramsey, talking to Joe and taking a few classes in school I realized that the goal is not to need life insurance by the time you reach that age, but that I needed a life insurance policy now, while I was young. Have you ever wondered if you need life insurance and why you might need it? I hope that this post will help you decide!
Do you need life insurance?
Couples with Young Children
If you have kids, and one of you passes away, you’ll want to have the funds available to make sure your children are cared for while the other spouse works to support the family day-to-day. In the event that something were to happen to you both, you would want to have that policy in place to help care for your children the way that you would if you were around.
Anyone with Debt and a Cosigner
If you have debt that you share with anyone else (ie credit card with your spouse) or that you got a cosigner on (ie your first car that your parents signed for), you should consider getting a life insurance policy. If your not being around to make payments or contribute to the income that is used to make payments would put the other person in a financial bind, having that insurance policy in place is the responsible thing to do.
Couples with a Mortgage to Pay
Becoming home owners was the thing that prompted us to get life insurance originally. The last thing that I would want to have to do if I were to lose Joe would be to move out of our house. This is the place we bought together and have renovated to fit our needs and desires. It’s the place we brought our babies home to and it holds a lot of memories for us. It’s not just shelter, it’s our home. Knowing that if we were ever to lose each other, we would have the funds to continue to pay our mortgage and keep our kids somewhere they feel comfortable and happy is the greatest feeling of security and peace.
The Stay at Home Mom
Joe likes to joke that if I were ever to pass away, he would use the life insurance to hire someone to cook and clean. But in all seriousness, those are the types of things you have to think about. If your spouse works full time while you stay home and manage the home, what things would they need to get help on in order to keep things running smoothly and not put too much of a burden on the family? Having a nanny to pick kids up from school, help with some tasks around the house and maybe even get dinner on the table every night could be just what your spouse would need to allow them to provide for the family’s needs both financially and emotionally.
The most obvious person in your partnership to need a life insurance policy is the one who works and contributes the most financially. If that’s both of you, that’s even more reason to get a policy for each of you.
Consider how much your family would need to hire someone to handle your role in the home or what your spouse would need to hire out when they get a job to make sure the family is financially secure. Maybe your spouse would want to go to school and get a degree or continue their education in order to get a better, higher paying job or one that they really love. These are all things that we thought about when we first talked about the not pleasant subject of what we needed to do to prepare in case losing each other ever became our sad reality.
The suggested amount of insurance that you should get is 10-12 times your annual income. Dave Ramsey also suggests that you opt for term life insurance over whole life insurance. That’s what we’ve done, and you can click here to read more about why the one is suggested over the other.
No matter where you are at on your financial journey, life insurance is an investment that you NEED to make! Don’t wait until your emergency savings is built up or your debt is paid off. Life insurance is just as crucial for you to have as home owners or auto insurance. Do what you need to adjust your budget and make it a priority because your family matters.
Photography by Sadie Banks Photography