The Insurance of Lives

Whether we like it or not, our lives have a 100% mortality rate. Many of us avoid talking about end of life matters as if it'll never happen, but I think it is wiser to settle that issue while life is still on the upswing. The topics of discussion are many, including estate wills and medical directives, but the simplest one is about life insurance.

A few years ago when we considered term life insurance, we decided it was not necessary at that time. If either of us were to kick the bucket, the other would be okay financially at salaries we earned at the time. We had saved up enough to cover reasonable medical (beyond health insurance) and funeral costs, and did not have any other long-term commitments that needed the assurance an insurance payout would bring.

Then everything changed, with expectations of a mortgage and a baby later this year. We felt it was time we carried life insurance as a safety net because those two long-term commitments would be difficult to handle alone should either of us not be around. We didn't want a huge policy; we figured a good policy should be just enough to pay off the mortgage and provide replacement income for up to 5 years. The raw number comes to about $375k (that is, $192k mortgage + 5x12x$3000 budget) per person. But that also means $50/month ($100/month total) for a 30-year policy, which we felt was too much.

Eventually we settled on a slightly smaller policy through Primerica that allowed us to pay $680/year for two 30-year policies (one on each other). It'd be sufficient to cover the remaining mortgage balance and at least 1-2 years of replacement income. Of course, as we build equity in our home through monthly mortgage payments, more money would be alloted to replacement income. We think it is a good plan for basic coverage.

The biblical imperative: "A prudent man foreseeth the evil, and hideth himself; but the simple pass on, and are punished." (Prov.27:12). It is the imperative to prepare for the future and leave an inheritance for your family (loosely Prov.6:6-8, 2Cor.12:14c, 1Tim.5:8), and life insurance is one small way you can do this. The loss of a loved one is hard enough, but it's worse with an additional financial burden.