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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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