You’re expecting a new baby. Congratulations! While you are busy sharing the exciting news and celebrating with your family and friends, one of the things that should be high on your to do list during baby prep time is buying yourself a term life insurance.
When you’re young and no one else is relying on your income, you don’t need life insurance. It would be sad if you pass away, but it’s not going to financially impact others. When you have a small living being relying on your income to be fed, clothed, diapered, and entertained, you need life insurance. This isn’t negotiable.
What kind of life insurance do you need? Almost assuredly you need level premium term life insurance. Term life insurance works like any other insurance you’re thinking of: You pay a set amount to protect against the risk of an event happening. If that event happens (in this case, your untimely demise), the insurance company pays. If the event doesn’t happen, the insurance company keeps your money and you get “nothing.”
Term insurance is extremely affordable. How much you need varies, but many experts recommend around 8-12x your annual income. That’s imprecise and personal situations impact that both up and down, but you likely need more than you’re thinking you do.
The cost varies based on the age you purchase it and health factors, but here’s an example according to Forbes.
- A 34 year old woman bought a 30 year term, $750,000 policy for $61 per month.
- A 32 year old man bought a 30 year, $500,000 policy for $24 per month.
- A 40 year old man bought a 20 year, $250,000 policy for $18 per month.
As you can see, it is extremely affordable considering what you get for it. There are some people who would argue, “But why would you spend all that money only to get ‘nothing’ at the end of it?” These people are wrong. You don’t get “nothing” when you buy term life insurance and don’t end up dying.
- You’ve bought the peace of mind to know your family will not be forced to move.
- You’ve bought knowing your spouse would be able to pay for additional childcare now that they’re unexpectedly a single parent.
- You’ve bought several years worth of time to readjust to an entirely different life without financial stress compounding all the other stress.
- You’ve bought knowing your family could splurge a little on dining out now that you’re not home to make dinner every night.
- You’ve bought your family not having to use a GoFundMe or other crowdsourced website to pay for your funeral costs.
- You’ve bought knowing your kids would still have funding for their education, despite your family no longer having two incomes.
You can buy all that for an amount most people spend on dinner and a couple drinks. You can afford it, but many people choose not to buy it because the benefits above are vague and theoretical, but the dinner and drinks make you happier today.
Now, it’s true that for the majority of people, you’ll get to the end of the twenty or thirty years and the policy will end with you having not needed it. According to these actuarial tables, if you’re a 30 year old man, you have a roughly 12% chance of dying sometime in the next 30 years.
While that’s a low probability, it’s exactly what insurance is for, low probability events that have a catastrophic outcome if they happen to occur. And nothing is more catastrophic to your family finances than you dying.
If you would like a complimentary review speak with an expert today.
