Recently, one of my fellow coworkers passed away at a young age, only 42. I was really surprised to hear the news and started to think about what would happen to my family if I were to die early. I became curious about whether I had enough life insurance coverage for my family. I realized that life insurance is necessity for your family in case of something terrible happens to you especially for those households with single source of income.
I am one of those who lives with single source of income, as my wife is a full-time stay home Mom, taking care of our two young kids. Prior to 2011, I have been carrying with only $145,000 whole life insurance which I ended up purchasing back when I was 27 years old. There have been many years where I regretted buying this whole life insurance because the premium I’m paying is $1,100 per year. Now, I’m glad that I continued to pay the premium by treating this premium like an investment. I have been accumulating dividend and in 10 more years, enough dividend would have accumulated to cover the annual premium.
I knew $145,000 worth of life insurance is nearly not enough for my family as we have $400,000 debt in mortgage. This is why I ended up increasing my life insurance by adding another $150,000 whole life insurance along with another $500,000 term life insurance policies. In addition, I have additional $250,000 term-life insurance from my company. That would make my total life insurance worth little more than $1,000,000. I would think this is enough, right? Maybe it is enough depending on what kind of life style my family need to live after my death. But more importantly, what happens when I stop working for my current company? I would go back to $800,000 worth of life insurance, which I need to be aware. Also, you cannot forget about college tuition for your children and the monthly bills and expenses that must be covered. Whether this amount is enough or not, the important thing is that I do feel comfortable with what I have and it makes me not to worry about unexpected death before I reach age 55.
Bottom line is that if you are married and have a family to take care of, you absolutely need life insurance. Just think about how your spouse can take care of your family if you are not around. I urge you to do your own calculations to determine how much insurance you need and consider purchasing your life insurance policy now! If you are in early 30’s, you can easily purchase $500,000 20 year term-life insurance for less than $300 per year. What is your situation with life insurance? Do you have enough coverage?