On my commute to and from work I like to listen to personal finance podcasts. A few months ago I was listening to one of my favorite shows when a story really touched me. A grieving wife called into the show to ask for financial advice. Her husband had passed away unexpectedly in a tragic accident. You could hear how terrified she was in her quivering voice. Broke, scared and confused she told the host that she was a stay-at-home mother with two small children. After consoling the woman, the host asked her about her finances. Sadly, her financial situation was pretty bleak.
The couple didn’t have any savings or an emergency fund, nor did the husband have a life insurance policy. The caller said she had been out of the workforce since she gave birth to their first child and she was nervous that she wouldn’t find a job because all of her marketable work skills were “rusty.” Since her husband passed, she hadn’t been able to pay their mortgage or bills and feared that she might lose the family’s home.
According to the caller, she and her husband were both in their thirties and in good shape. They’d briefly talked about life insurance, but quickly dismissed the idea quickly because they were both “young and healthy” and had other bills they needed to pay first. They had planned to get a life insurance policy in a few years once her husband had a more stable career and they had more disposable income.
Never in a million years would she (or anyone else) have thought that she would become a widow so young.No one wants to think that a tragic accident will happen to them, but unfortunately, sometimes they do.
When I heard that call, I couldn’t help but think about how that woman must feel. She was just a “normal” person who, due to no fault of her own, experienced a horrible tragedy. Listening to her story immediately made me think about my own financial situation. Obviously thinking about death isn’t very enjoyable (to say the least), but I now realize how important it is to plan for the unexpected.
If I were to pass away, my small life insurance policy (provided to me for free by my employer) would pay for my burial. Bf could afford to pay the household bills and mortgage on his own and wouldn’t live a much different life (financially speaking) then he lives now. Since bf and I don’t have kids, that small policy is basically all he’d need to take care of my final expenses.
But if something happened to bf and he didn’t have a life insurance policy (don’t worry-he does), I’d be screwed. Although I make pretty decent money at my job, I’d be financially strapped to pay for the mortgage and bills my own. Our monthly mortgage payment would, “eat up” my whole check, leaving very little money for food, lights etc. Let’s just say I’d be eating a whole lot of Ramen noodles and generic macaroni and cheese until I sold the condo and/or found a second job. I wouldn’t be able to travel, help out my grandparents or give to charity. Life as I know it would be drastically different and I certainly wouldn’t have all the comforts that I have now.
The way I see it there are 5 Reasons to get life insurance:
Aussie Readers, if you’re interested you can get a life insurance quote at Suncorp.
- You need $ to pay for your funeral. Have you seen the cost of burial expenses these days? Not to be flip, but you can’t just dig a hole in the ground and make a wooden box. Even the most “basic” options are going to set you back several thousand dollars in most parts of the country.
- You’re young and healthy. You might not need health insurance now, but when you do need it you might be less healthy and it might cost more. Life insurance premiums are based on age, gender and health. At 25 you might be fit, healthy and slim, at 45 or 55…?
- You have a family to support. If you have a partner or family, will they be able to survive without your income? If you’re a stay at home mom/dad, will your partner be able to pay someone to care for your kids?
- You have a mortgage to pay. If your partner pays a portion (or all) of the mortgage, could you continue to pay the mortgage without him/her? Selling your family home or being foreclosed on after the loss of a loved is added insult to injury.
- Your family is accustomed to a certain lifestyle. And I don’t just mean a fancy schmancy lifestyle. If you rely on your partner’s income, or your kids rely on your income to attend certain schools, live in a certain neighborhood or participate in certain activities, will they be able to continue living that lifestyle without you?
Do you have life insurance? Tell me your thoughts about why or why not?
Image: OC Always