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The most unpleasant topic in personal finance

by Karen on November 14, 2011

I am embarrassed to admit that our son is almost a year old, and we’ve put this off until now, but right now we’ve begun the process of reevaluating our life insurance needs and writing our wills. Ugh, it’s the worst.

The truth is, applying for life insurance is a complicated process, and every time I sit down to actually do it, I start feeling overwhelmed and I hate the feeling I get in my stomach when I think about a situation where we’d actually need this life insurance and I decide to put it off for a little longer. I realize this isn’t a grown up way to handle the subject, but I imagine I’m not the only grown up who feels this way, so I’m admitting it now. If you’re feeling this way, too, I’ll tell you what I told myself: it’s better to get it over with, and then forget about it and hope that you never need it.

So. The big question: How much insurance do we need? For Tony, we’ll need a considerably higher amount of insurance since he is the primary earner. Tony already has a policy provided by his employer that equals two years’ salary. That’s certainly a start, and if we didn’t own a home or have a child, it would probably be enough for us. But in the event of the unthinkable, we want to pay off the mortgage, pay our remaining student loan debt, and provide enough income for me that I can continue to stay home with Judah and any future children until they’re teenagers.

For me, our needs are less. We’d basically want to pay off the house and remaining debt in the event of my untimely demise. We’ve chosen not to include education needs for children in our life insurance estimates at this time. We really just want to cover immediate needs. We may choose to increase our coverage later, but for now we think our money is better spent on accumulating savings and paying off debt rather than paying a high premium for a million-dollar life insurance policy.

Unfortunately, Tony has a pretty extensive family history of cancer, heart disease, and diabetes. I have heart disease in my family tree, too. So our premiums may be higher than people without these family histories.

This calculator from the nonprofit LIFE Foundation is a handy way to calculate your life insurance needs from an unbiased source. Insurance salespeople earn commission on most policies, so you might want to determine your needs before talking with a sales agent.

I’m contacting a few sales agents this week for quotes, and I’m going to determine what we need to do to get the ball rolling. I’m assuming the most annoying part of the process will be medical exams to determine our current health.

As for our wills, our needs are very simple. Since we don’t have a lot of assets at this point in our lives — mostly just a relatively small amount of cash savings, two tiny retirement accounts, and a house with a big old mortgage — our most pressing concern in writing a will is who will take care of Judah if both of us were to die.

I’m looking into alternatives to hiring an attorney right now. A service like LegalZoom may be sufficient for us at this time since our will is going to be simple. I’d appreciate any experiences you can share about that service as I determine if it makes sense to go the super budget route or pay a couple hundred to an attorney.

I’m not going to lie, I feel a little sick just thinking about this stuff, but grown ups have to think about yucky stuff sometimes, so I’m sucking it up. I sure hope we never need to use ’em.

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{ 6 comments }

1 Kacie November 14, 2011 at 11:47 am

You are doing a great thing for your family! Dying without a will is a giant pain in the rear for the survivors. Do the life insurance and will thing and then you don’t have to think about it anymore.

We got our term life insurance through zander.com which shops it to a bunch of different companies, but they aren’t spammy about it.

I’m gunna email you some more. You can do it!
Kacie´s last blog post ..My new MagicJack Plus

2 Sarah November 14, 2011 at 10:12 pm

We recently went through the life ins process, and are still working on our wills and trust. We went the route of the Suze Orman kit. I’ve actually found it incredibly helpful.

3 Karen November 14, 2011 at 11:08 pm

Thanks for the tip, Sarah! I wasn’t familiar with the Suze kit, but now that I’m looking at it, it definitely deserves some consideration. I appreciate your advice!

4 Trish November 15, 2011 at 11:31 am

Hi Karen!
When considering the amount of life insurance needs for yourself, don’t forget to consider the cost of child care. Since you are a stay-at-home mother, someone would be needed to care for your child(ren). Just something else to consider :-)
Also I agree with the tip about the Suze Orman Kit! I think Suze is quite fabulous! I have read several of her books and have found her advice to be helpful and efficient.

5 Sharleena December 21, 2011 at 2:00 am

I appreciate you taking to time to contibrtue That’s very helpful.

6 Kerry November 16, 2011 at 2:57 pm

I am the living story. I went through Suze Orman’s Women and Money book and followed her advice. I started just before my husband turned 40 and didn’t make myself get it done until I was turning 40 two years later (figured I’d get a better life insurance premium before the age of 40). Then my husband had just turned 42 a month and a half earlier, 8 months before we had updated our life insurance policy, he died from a head injury in a mountain biking accident, something he did for exercise to stay healthy. I was a stay at home mom with a 3 year old and and a 10 year old. Go for the bigger policy. Just do it. With smart money handling before and after my husband passed (we had no debt but the house and a travel trailer when he died, we also had one GET account for our oldest child completed) I was able to pay off our home, pay off the trailer, trade it in and get something I could actually use for our family to keep camping, fund my youngest child’s GET account fully, put the rest away for retirement and live off the social security for the time my little one is little. Don’t think it can’t happen to you. The truth is it happens more than you think. Get a policy done while everyone is healthy. And talk about the plan afterward….you have no idea how hard it is to pick up and go on…financial stuff can be one less thing to be a factor.

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