Wednesday, 10 February 2016

Time For Life Insurance

You need to get life insurance! 
I am going to make an assumption here - correct me if I am wrong - you don't have life insurance. Most people don't and if they do it is through their work and they don't know a lot about it. If people do have life insurance, they got it because that have a child, which is good but possibly a bit later than they should have.

Why do I think you need life insurance?
- If you live independently, you need to arrange life insurance to cover funeral costs so friends and family aren't forced to find the money to bury you. Death is expensive, once you are an adult you should make arrangements so that you are paying for those costs - it isn't fair to put the financial burden on the bereaved.
- If you live in a partnership, the above applies but also the consideration of your partner's circumstances. Living choices and lifestyle habits grow out of the combined value of both salaries. The loss of a partner is a loss of that pay cheque, how will the remaining (mourning) partner continue to cover the costs of living the life built together? Life insurance provides the assistance to make the adjustments needed over a longer period of time instead of rushing to find a new place to live, sell a car, etc.
- If you have dependents, the need is obvious. This is the point that I think most people start setting up life insurance and legal wills. The life of your dependents has literally been built with, and sustained by, your salary. They depend on your pay cheque, hence the name dependents. Life insurance provides that money to allow for dependents, and partners, to continue living in the location and lifestyle already established.

Obviously, Jason and I are at the middle point of the above list. It would be easy for me (or him) to say, "I die, you sell the house and move." Without having life insurance that is basically what we would be saying to each other, since our soon-to-be home will have a mortgage that depends on both of us paying and would not be affordable alone. However, we need to find a balance because I also don't like the idea of having a life insurance policy that says, "I die, you get tons of money and then take it easy for the rest of your life." It is much more cut and dry to think about the impact on your children when addressing the financial consequences of your death. I think a lot of people would be less likely to say, "I die, you sell the house and move" to your partner when you have a dependent as well. Yes, the underlying message here is you WILL die, we all will, we just don't know when. Life has a morbid reality.

How do you learn more about life insurance?
Buying a house was hard, organizing renovations was challenging, arranging a mortgage was time consuming, but sorting out life insurance might be the most difficult of all, it is super complicated. My only suggestion is to read about it, ask about it, talk about, and try to figure it out. I looked first to Gail Vaz-Oxlade. Here is where I started my research/understanding:
- How much life insurance do I need?
- Types of life insurance
- Buying life insurance: Do's and Don'ts

Good Luck!

2 comments:

Sweeton said...

Well said. Although never a believer in Life Insurance (I always figured I could manage) George was. His Life Insurance meant that I didn't have to think, at a time when I couldn't, and could just arrange a funeral that fit him.

Meghan van Asseldonk said...

We have several different life insurance policies for a variety of different reasons we began purchasing policies not long after we were married. We have also taken policies out for each of our children, they have whole life which we will give to them when they turn 18.