Confessions for a Life Insurance Movement

Our friend Jeff at Good Financial Cents is at it again with another movement; this time it’s about life insurance.

In order to help spread the word about how important it is for most people to have some life insurance, I’m writing about it today as part of the Life Insurance Movement.

Jeff asks: “Why do you think life insurance is important for your family?

Well, life insurance is a way to make good on the life you would have delivered had you not passed. Life really is a social contract between people, and life insurance is a cost-effective way to insure against income loss.

I thought I’d offer up some confessions rather than much advice, since I’m not what the experts would call “suitably covered.”

 

CONFESSION: I’ve only had life insurance for about a year (and I’m “underinsured.”)

I had to be dragged, almost kicking and screaming, to life insurance.

When I was young (maybe I still am), I couldn’t bring myself to get it. I had a small policy through my job, but it was only equal to one year of my salary. It wasn’t anywhere near what we would need to pay off our debts or leave anything left over.

I can say now that as of one year ago I have additional coverage, more than we owe on our house – but not enough to provide any type of long-term stability. It is roughly three times my income. If you listen to those who sell life insurance, they recommend ten times your income.

If you’ve been reading lately, you know that we are debt free minus the house. The amount of coverage we have on a 20 year term will pay off the house, provide enough for a burial at sea (kidding), and leave a little left over.

It is not enough to allow my wife to retire. That is not my goal. Instead of sending money to an insurance policy, I worked hard the past few years to get us to the point of debt freedom. We have no credit card debt, no student loan debt, only a mortgage with some equity. I will work equally hard to build wealth while I’m alive.

To me, life insurance is important because I don’t want to be that guy who is possibly leaving money on the table. Term life insurance is fairly cheap. For less than $20 per month, you can get over $100,000 in term life insurance. Even if you pay for 20 years without needing it, you’ve made a fairly decent trade: peace of mind for less than $200 per year.

 

CONFESSION: I pay more for life insurance because I hate needles.

One of the main things keeping me from getting more coverage is my visceral hatred for needles.

I won’t give blood, nor submit to a blood draw that may be needed for a life insurance policy.

This has caused me to have to pay a higher monthly premium for a policy from American Family Insurance that provides coverage without a medical exam. I know it’s stupid, especially since I don’t mind the needle of a tattoo gun.

In the long run it’s an extra $60 per year so maybe it doesn’t bother me that much, but I know I will eventually have to face up to the need to get a better policy.

 

READERS: Do you have any life insurance confessions?

 

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19 Comments
  1. No needles but tattoos? That IS funny.

    I have one. We have an old variable universal life policy on my wife that we’re totally wasting money on. I’ve been saying for a year that we need to dump it, but other stuff always comes up. As I’m sitting here there’s a gigantic money leak streaming from my wallet.

  2. My confession would be that I don’t feel like I need it! And I wouldn’t have it if my work didn’t pay for it.

  3. Confession:

    I have been denied coverage by most life insurance companies due to certain medical conditions.

    Because of it, I feel I am currently underinsured.

    My wife and kids, however, are well covered.

  4. That is surprising that someone who likes tattoos wouldn’t like other kinds of needles. I do agree that a life insurance policy shouldn’t be about making the other person rich. 10 times your annual salary seems a little extreme to me.

  5. I didn’t buy life insurance for the first year that my wife and I were married simply because I didn’t want to cut places in our budget to cover the cost. Thankfully nothing happened in that year but I’m very glad we purchased it and it definitely provides me peace knowing she’d be taken care of if something were to happen.

    That really sucks about the needles thing. At least you got something instead of forgoing it all together!

  6. My confession: I I am so foolishly optimistic about my passive income possibilities that I think I will be able to replace my need for life insurance. But man, seriously, term life insurance is so cheap that I would say it is irresponsible to not have 10x your incomeincome if you have a spouse or dependents who rely on your income. I pay only $57/month total for $500k on me, $400k on my wife plus a $15k rider on each of my three children. That’s nearly 1,000,000 dollars in insurance for only 57 bucks a month!

  7. Don’t worry. Confession is the first step to healing…

    It’s so easy for a guy like me who has no problem with needles to say “Just do it, it’ll take two minutes,” but I obviously have no idea what you go through. So I’m still going to say it, haha! ;)

  8. I don’t have life insurance other than through my job and wrote why in today’s post on my blog. Honestly I don’t need it right now but will be getting a policy as soon as we have a kid.

  9. I’m 25 and the only times I’ve had life insurance was when it was offered by work. My beneficiaries would be my mom and my dog, Murray. It is definitely something to think about once I get married.

    My parents pay a good deal-enough for me and my brother to get 250k each should they both die. I think this is money they could be funneling towards retirement as my brother and I are both grown now.

  10. I got life insurance as soon as my wife got pregnant. As someone who REALLY HATES NEEDLES, it was tought to go through. I almost passed out on the blood draw, but held my own, and that sacrifice is worth every second of agony I suffered (ok, just a little exagerrated). y wife sleeps well at night knowing she doesn’t have to sell the house, move in with her mom and work two jobs if I kick the bucket.

    But seriously, I friggin’ hate needles…

  11. Up until a couple of years ago I was was completely uninsured when it came to life insurance. Since then I’ve seen the light and now have 500k on me for only about $30 a month. It could have been lower if I hadn’t needed to lose some weight when i got the policy, but I think I’ll quite possibly be getting a bit more once I lose the weight. Term life is so affordable there really isn’t much reason not to!

  12. John, do you have kids? If so, you might consider taking out more insurance. I’ve had a few life insurance exams, and usually the nurses are very good, just a small stick! Don’t watch. It’s over really quickly.

  13. Life insurance is not always needed. If you don’t have a dependent you don’t need it. Ar you not eligible for employer group life insurance? I wasn’t required to get a needle for coverage..

  14. … my visceral hatred for needles

    John – You and I have something in common! I actually went out cold when I got my blood drawn for my insurance policy! Ha! It’s a good thing my wife and I bought a 30Y Term because I don’t think she’s ever going to let us go through the process ever again!

  15. No confession to make, but I wish I was 10lb lighter when I got tested for my life insurance policy. I would be savings some cash.

  16. I confess I have no life insurance. However my student debt is life-insured, so basically I do not need it. When I get married/have children I will definitely be getting some though.

  17. Well John, I used to have a little over 10x my income on me alone, and just a $250k policy on my dear wife, all outside of my work.
    However, my employer offers 2x salary for me, and we bumped that up to 5x along with $200k on my wife. That may sound silly since she is a stay-at-home mom. However, it will allow us to payoff our mortgage almost completely if she were to pass away, and with my income we would still be able to make it AND I’d be able to put more money away into retirement funds and cut back hours at work to be with our kids more.
    As far as I’m concerned, I am simply trying to ensure that if either of us passes, that doesn’t mean that the other person doesn’t have to work at all, just that they wouldn’t have to work more than 20 hours a week.
    FWIW, when we did have term life insurance not through my work, both of us were in the very best category for weight, BMI, non-smoking, and healthy overall with minor illnesses of family members until they were at least in their mid-60′s.

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