Please…Please…Insure Your Life…


A few weeks back, a colleague and a friend of mine suddenly passed away due to complications in removing a tumor from his brain. He was only 39-years old and left behind a wife and two young kids, ages 6 and 2. Just a week back, I had meetings with him and a week later, he is no longer with us.

This is how fast your family’s life can change. I know all this talk about death and stuff sounds morbid but we know that all of us will eventually meet our maker someday. It is even worse when that happens when your kids are young.

Though the situation is tragic, we could all take action today to make it a little better and a little less burdensome for our families after we are gone. Insuring your life against this kind of catastrophe will make sure that the family you leave behind will at least have one less thing to worry about.

Insure what you cannot afford to lose. In this case, you are buying insurance to replace your income so that the financial aspect of your family’s life does not change.

First, who does not need life insurance?

1. A two-income family with no dependents probably does not need life insurance (more on this in the next section).

2. Unmarried folks with no one depending on their income. And yes, that includes kids. I come across so many situations where parents buy life insurance on their kids. Utterly stupid idea.

Who needs life insurance?

1. A single-income family with or without kids.  If no kids, insuring the life of the income-earner is a must. If with kids, you probably should buy life-insurance on both parent’s lives. If a non-earning parent passes away, you might need a nanny to help take care of your kids, especially if they are young.

2. Two-income family with no kids but with large debt obligations. If one income cannot afford the home mortgage for example, buying insurance on both earning members is a must.

3. Two-income family with kids – yes in almost all cases and for both parents.

How much, what kind and how much does it cost?

Typically about 10 times your household income. The best type of insurance to buy is either a 15-year or 20-year level-term. The duration depends on how long till your kids graduate college and are on their own. Level-term means that the annual premium remains the same for the entire duration of the policy.

Buy a policy from a company which is financially strong and will be around in case you need to execute the policy. A.M. Best does a fantastic job analyzing the financial strength of insurance companies. Only buy policies from companies which are rated A+ or A by A.M. Best. A $1 million 20-year level-term policy for someone in his 30’s with no pre-existing health conditions should not cost more than $40 per month. That’s really dirt-cheap.

Why not beyond 20-years? Two reasons.

1. The cost of insuring your life beyond 50 years of age is exorbitant.

2. In the interim duration before the policy matures, you would have likely planned your finances in a way that your family would not need life insurance in worst-case scenarios. Your assets should be able to replace the lost income.

How to buy?

Simple. Go to, fill out the details and start the process.

Growing up, I always use to worry as to what would happen to me, my mother and my siblings in case something tragic were to happen to my dad (the only earning member of my family). Fortunately that never happened otherwise my family’s life would have been completely different, probably for the worse.

Take the worry out of your family’s life…go get insured ASAP.

Image credit – Kat Grigg, Flickr