Life is full of questions. There are the day-to-day questions like “what shall I wear today” and “what should I make for dinner” and life-changing questions like “How many kids will I have?” or “Should I take that new job?” And then there are the thought-provoking questions such as “Will I be successful?” “Will I be happy?” “Will I be surrounded by loved ones?”
There are so many unknowns in life, that it is such a relief when one of those questions gets answered. Purchasing life insurance gives you the answer to the big question, “what will happen to my family if something happens to me?” Life insurance can give you the peace of mind knowing that if the unexpected happens, your family will betaken care financially. But reaching that point of financial security, might require asking even more tough questions along the way.
Something that my college journalism professor told me years ago, is that when you have more questions then answers about a topic, the first place to start is to answer a question by asking another question. One can do this by using the “5 W’s” of research. So today I am going to answer life insurance questions by looking at some of the “who, what, where, when and why’s” of life insurance.
WHO needs life insurance?
The first thing that comes to my mind when thinking about life insurance is that I would need to cover the cost of the lost wages of any “bread winners” in the home. For my situation, that would be my husband. Figuring out how much I would need to cover this cost is easily done by evaluating the Monthly budget worksheet referenced in part 2 of our financial series “How to Spring Clean Your Bank Account.” By evaluating your monthly costs, you can determine how much those costs work out to be annually. You can then take your annual cost and multiply that by the amount of years you would like to be covered, for a total amount of coverage needed.
However, those bringing in an income are not the only people in the home who you may want to consider getting coverage for. Genworth Financial, a provider of long-term care insurance, mortgage insurance and wealth management services have provided several resources to help promote financial education. In an article referenced by Genworth “Why Stay-at-home Parents Need LIfe Insurance,” Wendy Boglioli, National spokesperson for Genworth, discusses why stay-at-home parents might also need life insurance.
She says that stay-at-home parents should evaluate this important question, “If you died tomorrow would you have the money to hire people to do all of the things that you do for your family on a day-to-day and year-to-year basis.”
Some of these services may include, child care, meal preparation, tutoring, cleaning and housekeeping, laundry service and money saved through using coupons, store sales and doing thrift shopping.
According to the above mentioned article, “Salary.com estimates that a stay-at-home mom with one child who is pre-school age and another child who is school age would provide services worth a medium salary of $112,963[annually].”
WHAT will it cost?
For me, cost is probably the biggest factor in deciding if I should buy life insurance or not. In trying to decide if I could afford the cost of life insurance, I consulted life insurance ontario for an insurance calculator.
This calculator allows you to enter your age, the amount you wish to spend, and your gender, and then uses that information to generate the amount of life insurance that you could get for the amount you are able to spend. The interesting thing about the calculator is that you can adjust the amount that you want to spend and see how that affects the total amount of life insurance you would receive.
I put my information into the calculator and found that I was able to get $50,000 worth of coverage for only $8 per month, which is the lowest amount it lets you enter. However, if I brought my monthly payment up to just $20 per month, my amount of coverage was significantly raised to $350,000 worth of coverage. The calculator also gives you ideas of areas that you can cut out of your monthly budget to increase the amount that you are able to pay monthly towards life insurance
WHEN should I start purchasing life insurance?
Another interesting thing about the “Life insurance calculator” is that it allows you to adjust the age setting of the calculator. By doing this you can see how much difference it would make to the total amount of coverage you could buy, now verses in the future. I learned that if I spend $20 per month on life insurance now I could get $350,000 worth of coverage, however if I wait 10 years that amount would decrease to $250,000 and if I wait 20 years that amount would only be $50,000. I found this to be a useful tool in helping me to evaluate when would be the best time for me to purchase coverage.
WHERE can I turn for more information about policies?
There are three main types of life insurance policies,Universal, Term and Whole life insurance. Genworth has provided a useful brochure “What is life insurance” that gives you an overview of each type of policy and what situation they would be useful for. This is a great place to start, in determining what would best fit the needs of you and your family. After reading through these options it might be useful to sit down with a financial professional who can help you further evaluate your needs and find a policy that will work for you.
WHY should I get life insurance?
I think that the answer to this question varies from person to person. After learning more about life insurance myself, I have come to the personal conclusion, that it seems like a great way to make sure that my children are looked after should anything happen to myself or my husband. If something tragic did happen, I know that I would want those left behind to be well cared for and not left in a bind financially. However, I think that as my children grow and my family’s financial situation changes, my life insurance needs will also change. This makes purchasing life insurance a unique process for each individual. Using the tools and resources above, you will be able to make your own decision about life insurance and why it is or isn’t a need for you and your family.
Leanne Cox is a guest writer for CleverHousewife.com. She is a stay-at-home mom to two kids, and a credentialed preschool teacher. Leanne teaches “mommy-and-me” and “preschool style” music & movement classes through her business “Little Stars Music & Movement Classes” . She is passionate about encouraging early childhood education through hands on learning and exploration