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Yesterday I mentioned that one of the 3 things I won’t cut from our budget is life insurance. Today I wanted to explain a little bit more why it’s such a top priority for us.
My mom worked for an insurance agency for quite a while, so naturally, Ian and I got life insurance immediately after we got married. (It took us 4 kids before we finally made a will, which we should have done much sooner. If you haven’t made a will yet, do it NOW).
However, it wasn’t until after we went through Financial Peace University that we learned about the different kinds of life insurance. (Sorry if you told me, Mom, I must not have paid attention).
We soon switched from whole life to term life insurance. Doing so allowed us to save a lot of money on premiums and increase the coverage amount.
Today, each of us has a large policy with child riders (kids don’t need their own policies). Why so much? If one of us is widowed, especially with small kids, we don’t want to have the financial pressure to go back to work.
Experts recommend doing at least 10x your annual salary for coverage. We chose more than that because we have so many kids. If you’re an at-home mom (or dad), you still need to have adequate coverage because of the value you bring by staying home. I’d go with at least $250,000 if you’re an at-home parent.
If something happens to both of us, we want the people taking care of our kids to do so in a way that allows for our children to have an at-home guardian (or guardians) and to avoid the added stress of not having enough money to take care of four kids.
As uncomfortable it is to think about, I’m glad that it gives me one less thing to lay in bed at night worrying about.
Does having life insurance give you peace of mind?