Life insurance is, in essence, a somewhat unpleasant topic. Ensuring that your family takes financial care when you are not there is sad to think, but it is also very necessary. That's why, when my husband and I found out that we were expecting our first child just over four years ago, we put "life insurance" on the top of our to-do list.
Deciding how much life insurance you need is the hardest part. It can be disheartening to sit down and bear the running costs, not to mention the future forecast in terms of how much it might take to get the child to go to college, what the mortgage / home costs might be (in our case, we didn't have still purchased our first home) and what other costs you may want to cover when you have a family.
Settle on our life insurance policies
In our case, working with a financial planner to find how much coverage was comfortable was essential. Of course, you don't have to work with an online planner, calculators can help you.
Eventually, however, we found a number that included moving our son to a state public college (the cost of which had been expected 18 years since then), as well as covering the remaining costs of our being at home and applying the salary my or my husband's for a number of years to allow the living spouse to get back on his feet.
That number, not surprisingly, turned out to be quite high. We decided to split our insurance coverage by a certain amount into a life insurance plan (which is fairly inexpensive, at around $ 80 a month for both), as well as a full-life policy (which is much more expensive, almost $ 500 a month for the two of us, but most of which we will be able to recover at the end of the policy). We felt pretty good about that $ 1 million coverage each, so we signed the plan and moved on.
Less than a year later, I was pregnant with my second child. Having just gone through the process of settling a policy, we felt, to be honest, a little tired. Shaking things up again to increase our coverage especially when we were trying to increase our expenses in general with a second child seemed very stressful. Our financial planner recommended that we update our policy, but in the end we decided not to, at least for the moment.
Because we left our life insurance coverage alone after our second child
We had received an inheritance
Unfortunately, my mother died when I was about seven months pregnant. This was, of course, an incredibly stressful and emotional moment for us, but it left us with a lump sum of inherited money, which we deposited directly into our daughter's 529 college savings account.
This gave our first daughter a significant edge in terms of the university plan, which means that we felt, at least for the moment, as if we were in a good position with regards to that aspect of financial planning.
We had a better idea of our housing costs
When our second daughter was born, we had already purchased our first home with a 20% discount and we would have lived for just over a year and a half since she was born.
This meant that we had a fair amount of equity in the house and, if one of us needed it, we could buy it permanently without withdrawing a significant part of the life insurance money.
We were doing more and therefore we were saving more
A year and a half in our life insurance policy, both my husband and I were making more money than when we initially created the account, which means that we have been able to save more in a traditional savings account and towards our retirement accounts and our daughter's 529.
Although we may change our policy in the future if we believe it is necessary for now, this plan seems enough for us and it certainly helps both sleep better at night.
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