This post contains some affiliate links from brands we use & love that help us grow Clever Girl Finance! Please see our disclosures for more information.
Life insurance is one of those things that we kind of know we need but many of us don't want to deal with getting right away. Sometimes it's hard to even think about life insurance because, for many people, the whole idea of getting life insurance is just plain scary.
Perhaps, you feel like you are young and have plenty of time or you even feel like, if something happened to you, there would not be any major financial impact. Or maybe you can't decide what insurance type would work best for you. For instance, do you need term vs whole life insurance?
Well if you've ever felt any of the above, I'm here to set the record straight.
Why life insurance is important
Life insurance is not something to be afraid of at all. Instead, look at it this way; Having life insurance is protection for you and your loved ones that can minimize or potentially eliminate financial distress.
And it's something you want to seriously consider. Especially if you have kids or dependents who rely on your income, have shared financial obligations with a significant other, have debts like a mortgage or student loans, are a stay-at-home parent or want to leave something to your kids (this is one way in which people transfer their legacies and create generational wealth).
For instance, as a mom of two small children with a small business, I have a huge impact on my family financials, and it's not just tied to the money I bring in with my business. It's also from the cost of all I do in my household. Let me explain!
The cost value of all you do and why you need life insurance
One day I sat down to really calculate what the cost value of all of I do for my family and I was surprised. Shocked even. I added in all my jobs.
- Watching and teaching my kids (Job title: babysitter/teacher).
- Cooking for my family (Job title: chef).
- Cleaning my home (Job title: housekeeper).
- Driving my kids around (Job title: car service).
After all of this I determined that if I were to hire another me to do all of these things that I currently do for my family, it would cost me almost $70,000 a year!
This alone is a huge financial impact if (God forbid) something were to happen to me. And I didn't even include my other annual financial obligations, for instance, my kids’ tuition or our household bills and mortgage.
This is why life insurance is a non-negotiable for me. My 20-year, $500,000 term life policy will help ensure my family is protected financially and can help to cover several years of the loss of my value and income. If you are the sole or primary breadwinner then putting yourself in this scenario makes having life insurance even more critical for you.
Life insurance and your long-term goals
What are some of the biggest long-term financial goals you currently have?
Personally, I’m saving for retirement and my kids’ college education. I have a vision of exactly how I want to retire in my head that I need to get to and similar to the gift my parents gave me, my husband and I have decided that we will be paying for our kids’ college education in full, wherever they choose to go.
But again, if something were to happen to me, these goals could very well be thrown out the window if both my spouse and I don't have a life insurance policy in place.
This could mean a difficult retirement for me or my spouse and student debt for my children. All scenarios I don't want, and that’s why I have life insurance, in addition to my savings and investments, as a safety net.
Make the process of getting life insurance simple
The truth is life can be hard and unexpected situations happen but it's better to have a plan in place, and one key element of your plan should be getting life insurance, and it doesn't have to be a complex process.
There are several online providers that offer life insurance and a quick Google search yield results and supporting reviews. You can also take some time out to contact your local insurance provider to have a conversation about what you might really need.
A favorite term life insurance provider is Ladder.
Ladder allows you to shop for the best rates, apply, manage and adjust your policies online and you may qualify without needing a medical exam. You also have the ability to ‘Ladder’ your insurance needs. This means you can apply for more coverage or decrease your coverage as you need it right in your account.
Be sure to shop around to compare policies and rates before you make a final decision.