I'm going to write a few posts about insurance, life, car, home, and umbrella policies. But to start I'll discuss whether I think we need life insurance as DINKS in their 20s with some assets.
I'm constantly fighting internally over my internal desire for life insurance and the fact I don't need it. DH says no way, not until we're pregnant are we getting life insurance. His logic is that he gets 2x his salary from work, and as the breadwinner that amount will more than adequately take care of me. With our assets and his insurance I could live in our house if I choose for at least 5 years. If I die, he can manage the mortgage note solo and our current assets will more than take care of burying me. So his position is that we don't need insurance. My position, it's a really cheap rate and I feel nervous.
Right now we're both below 30, and rate are exceptionally cheap. However, I do acknowledge not having dependents makes it somewhat difficult to justify paying for life insurance. Also I am constantly wavering between 20 and 30 year term life insurance. Experts say long enough for your youngest to be done with high school. But we don't even have kids and we're not sure when they'll come or how many we'll have. So how do I know we'll have enough? But do we really need 30 years? I think we'll be self-insured probably by 20 years from now, so is it necessary to buy the longer term?
Another major issue that prevents me from buying life insurance is that I make very little money, and DH is starting his career (1 year) and the growth potential for both of us is huge. So if we were to buy 10-20x my income it'd be 300-600k. But I'll outstrip that when I graduate, and if we bought 10x DH's income it'd be minimally 1 million. But this really are our lowest earning years so if we buy now will be underinsured in say 5 years? What do we do if our income doubles or triples when we finish school? Suddenly will 500k policy be enough if we make $250k/year?
I guess this is part of the reason I am not currently pushing for life insurance. I feel as though we don't have enough information about our future. We're not sure when we're having kids, we're not sure how much we'll be making, we're not sure how long we'll need it for. I wonder if this is a problem other 20-somethings face when you feel as though your starting out and getting prepared, yet not all the information is in front of you...
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4 comments:
From someone on the wrong side of the life insurance question: Get it. I'm 30-something, and my wife was killed in a car accident last year. At the time our son was just shy of 2. If I had $1M from a life insurance settlement, I'd have quit work, no doubt. Maybe even with $500K, although I'd certainly have to go back to work at some point then.
As it is I struggle mentally with motivating to work. For my own sanity and for the sake of my son, I wish I could get away from the daily drudgery of work right now.
I passed on life insurance for my wife because my wife was a student and I was the only breadwinner. I got insurance on my life through the job for a couple hundred thousand, and was considering more. (Honestly I had been considering purchasing more since my son was born, but parenthood has a way of distracting you and I had never gotten around to it.)
I was taking a very financially-oriented view of our needs. What I didn't anticipate was our psychological needs. The money certainly wouldn't get my wife back, or make me happy, but it would allow me more time and space to heal.
I would definitely get it. It's not expensive. And what would happen were your husband to die and THEN you find out you are a few weeks pregnant? And like the other guy said, it's enough money to let you off work long enough to heal some.
i'm in a different situation than you are (single), but whether to buy now or buy later was a decision i mulled over recently. i actually wrote about it on my personal finance blog. again, slightly different situation but i think the numbers i ran in terms of cost now vs. cost later might be helpful. =)
Anonymous, sorry about your wife. BUT I know we will have life insurance in place on both of us the moment we concieve. Why didn't you get any when you had a child?
That's the reason to get life insurance to provide for a dependent. It's the reason I can't get my DH to sign up because we don't have children and he feels if either of us die right now we're both well provided for.
And he's right. We have 20% equity in the home, money for retirement, and as the sole breadwinner he can easily live without my income and through work I've got 2x his income which is $200k. So I would be well provided for at 27 years old. I'd have close to 500k if he died (knock on wood).
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