If your dependents require your financial support for their livelihood, then life insurance is a must. This is especially important for those of us who are parents of young children. We need to provide enough money to cover the costs involved in raising our “babies”. Life insurance protects our kids from the unknown and helps them through an otherwise difficult time of loss.
Sure, no one wants to think about keeling over. It could be today, tomorrow or 50 years from now, but it will happen eventually. No amount of money could ever replace a parent. However, having life insurance coverage will bring you and your family some peace. In addition to providing income to cover everyday living expenses, your family needs insurance to cover any outstanding debts (i.e. mortgage, credit cards, loans) and other expenses like your funeral and burial costs that can easily run into the tens of thousands of dollars. You don’t want your children or their guardians to be left with any extra burden in addition to the emotional and financial burdens they will already be suffering.
Except in special circumstances, term life is probably going to make the most sense for most people reading my blog. Why? It’s simple to understand and easy to compare across insurance companies. It’s much more affordable than whole or universal policies ($25/month vs $450/month), and the death benefit gives you the most bang for your buck. Term life doesn’t lock you into an investment that may not give you the best returns. There are rare cases where whole or universal policies might be worth a look. If you’re wealthy and looking for investments where you can grow your money tax-free, these policies can be a solid option if you’ve already maxed out your retirement savings.
Due to financial restraints, I chose a term life policy. Houston traffic is intense and God forbid something happens and I meet my demise on the way to work one day, I know my girls will be the beneficiaries of a $500,000 policy. I am in good health and I don’t smoke so I was able to get a 20 year policy for $225/year when Milla was a year old. This is one cost I don’t skimp on. This policy gives me some peace of mind knowing that my little angels will be taken care of in the event I’m not around. When you’re a sole provider, nothing is more important.