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I hope to live a long and healthy life. But I've seen too many friends and acquaintances die before their time - from cancer, accidents, or unexpected health problems - to take longevity for granted.
All I know about the future is that it's unpredictable. So, just in case I don't live to 103 as a Ouija board told me when I was a kid, I bought term life insurance a few years ago.
Planning for the worst, hoping for the best
My biggest fear is that, if something happened to me, my wife wouldn't be able to afford the mortgage on the condo we own together. I worry that she would have to find a new place to live and pack up and move in the middle of dealing with grief and loss. That's why I bought extra insurance coverage through my employer when I could. After I left that job to become a freelancer, I bought a $100,000 life insurance policy so she would be protected.
My concerns about what happens after one spouse dies are based on an unhappy experience. A few years ago, a friend's spouse was diagnosed with a terminal disease. She struggled to pay the bills on her own during the first year after her partner passed away. She has since gotten back on her feet, but she needed extra financial support for a time. I hope my life insurance would provide that support for my spouse if something were to happen to me.
I don't expect my $100,000 in coverage to set my wife up forever. But it would be enough to pay down the mortgage to the point where she could afford the payments on a single salary. There might be enough left over to pay her expenses if she needs to take unpaid leave from her job. (I am, of course, imagining that she will be inconsolable if something happens to me. I know I would be if anything happened to her.)
Buying life insurance beyond what my employer provided
Before I bought my own policy, I had life insurance through an employer. Getting life insurance through my employer was fairly easy. The basic policy, which was for $10,000, was a benefit that my employer paid for. All employees automatically got that.
To get additional coverage, I needed to provide some health information to the insurer and pay the additional premiums. It was a good deal. If you can get extra life insurance coverage through your employer to protect the people you love, I encourage you to do it.
Buying my own life insurance policy through my insurance agent was a bit more of a process. The insurance company sent a nurse to do a health check before it would issue the policy. I wasn't charged for the nurse's visit - the insurer paid for that. This was to confirm that I wasn't taking out life insurance after finding out that I had a life-threatening health condition and determine if I was healthy enough to qualify for the policy. Fortunately, I passed inspection.
Term life insurance vs. whole life insurance
When I bought life insurance, I had to choose between term life and whole life insurance. Term life insurance is valid only as long as I pay the premiums. And, at the end of a set term, my insurer can decide whether to cancel or renew the policy. They might increase the premiums as I get older and thus become a higher risk. Once I stop paying the premiums on my term life policy, the coverage ends and my wife would get no payout after my death.
Whole life insurance is a policy that you purchase outright. After paying monthly premiums for a set number of years, you own the policy. If you need money before your death, you can cash it in early or borrow against it (for a lower payout).
The premiums for whole life coverage are much higher than for term life. Because I was already in my 50s when I took out the policy, the premiums for any kind of life insurance were already quite high.
Life insurance premiums are based on statistical life expectancy. The rate took into account my current health and my health history, plus other life risk factors. The term life premiums were much more affordable than whole life, so that is the option I chose. Now I pay $32.11 per month for my policy.
In addition, term life made sense, since I am most concerned with having the coverage now, when I'm in my prime earning years and the loss of my income would be a bigger financial hardship to my spouse.
If I can no longer get term life insurance when I'm older, I'm fine with that. Every year that we pay down the mortgage, the risk of my wife losing the house on my death diminishes. In addition, I continue to put money in my retirement account, which will go to her after my death. After she retires, taking the time to deal with grief will have little or no financial impact on her. Over time, the extra financial cushion that life insurance provides will become less important.
I hope my wife and I both live to a very old age. It's hard to think about the possibility of dying, which is probably why I put off thinking about life insurance for so many years. I'm grateful I realized the value of life insurance and glad that I can protect my wife in case the worst happens.
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