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Joseph Lalonde
When I tell my friends and family that I purchased life insurance for my wife and myself, I get strange looks. It's not normal, at least in our situation.
In 2019, we paid off our final debt: our house. That was a big one. We also don't have children. And debt and kids are two big reasons many people get life insurance.
Now that we're debt-free, do we really need to carry life insurance? I believe so. And there are a few reasons for this.
I know we don't have to carry life insurance. Most of the time, people use life insurance to cover funeral expenses after the unexpected loss of a loved one, pay for mortgage payments, provide an inheritance for children, and cover continued living expenses that come with the loss of an income earner.
Our savings and emergency funds would more than cover any unexpected death in our household. That's not why I purchased life insurance for myself.
Rather, I chose my $750,000 30-year term life insurance plan to care for my wife in the case of my death. In addition to this personal plan, I carry another $50,000 through my employer. That's $800,000 in life insurance coverage.
I want her to be able to feel a sense of peace in the midst of a storm should I die before her. I want her to be able to continue to live the kind of lifestyle we currently enjoy. I don't want her to have to worry about how she will have to pay the next gas or electric bill, or whether she will have to go back to work.
My wife carries a lot less life insurance than I do. She also makes less. Her plan is through my employer. We decided to have her carry $25,000 in life insurance. Her life insurance would cover any additional costs for a funeral, incidentals, and allow me to take some time off to grieve. We are looking into adding additional life insurance for her, hoping to bump her coverage up to $300,000.
My $750,000 policy costs $793.75 per year, or $66.15 per month. For me, this is a small amount to make sure my wife is well taken care of if I die. She'll be able to pay for any funeral expenses and put the remaining amount away in an investment fund so that she will have a reliable income stream when I am gone.
My plan through my employer is much cheaper. I have $3.74 deducted every pay period to cover my life insurance. This equates to $7.48 a month. It's so little we don't even notice the difference in my income.
My wife's plan through my employer is actually cheaper than mine. Her rate is $3.12 a pay period, or $6.24 a month.
There's a peace of mind that comes from carrying life insurance. We know death is coming for us. At some point, we all die. When that happens to me, I want to be financially prepared. I've now carried life insurance for three years, and they've been peaceful in the knowledge that I will be able to take care of my wife long after I am gone.
We decided to go with term over permanent life insurance because it will cover us until our savings, investments, and income are more than enough to cover the expenses and remaining income needed to give either of us a stable living situation. Term life insurance is also a lower-cost policy. We can take what we're saving and place it into investments that will lead to higher returns.
While death is never easy, I will have made my death easier for my wife. She won't have to worry about working extra hours at her job, finding someone else to care for her, or having to switch jobs to make up for my lost income.
Even though we're debt-free, there are still things that have to be considered when it comes to life insurance. I feel my wife and I have covered those bases and she will be covered should anything ever happen to me.
That's what life insurance is all about: Protecting the loved ones we leave behind when we die.
This article was originally published in November 2022.
