by David Chen, Guest Blogger
Prior to having my child, I did not think much about life insurance and simply lived each day as it came. Since the birth of my child, I have taken things a lot more seriously. I have gotten my health back into tip top shape and now I am making sure to save money and think about the future. It truly is amazing what a kid can do. They put things into perspective for you. After all, you have a tiny human depending on you for EVERYTHING. It’s a lot of pressure.
As I think more and more about life insurance and what it would mean to me, as a single parent, for my daughter, I have decided to choose a plan and purchase it. Below, I will talk about why I want the plan and how to go about getting one.
Why Life Insurance?
Think about it for a moment. What would happen to your family if you were to suddenly die today or tomorrow? Would they be able to sustain themselves financially? Would they be okay without you? Often times, the answer is no. I know that if I were to die today as I write this, my child would not be taken care of without a life insurance policy in place.
The reason I want to take out a policy on myself is so that my child is protected. My child’s future is secured and in place. My child will not be left dependent on welfare once I am gone, should the worst happen to me.
Before I do take out a policy though, I need to know how much to take out. This number should be one that would sustain my child through her years until she is old enough to take care of herself. Therefore, a $10,000 policy is not going to be enough should I die tomorrow and she is only 10 years old.
Basics on Getting Life Insurance
There is a lot to know about life insurance. It took me time to read, research, and learn about it before I was able to settle on what would work best for me in my situation. I learned that an insurance policy will help to:
- Pay the rent or mortgage on my home
- Setup a college fund for my child
- Protect my child’s future
- Pay off any debts I currently owe
- Help to maintain my child’s standard of living
I found a nifty little calculator when I was determining how much life insurance I would need and it helped me determine that I needed a policy in the amount of somewhere between $300,000 and $500,000. This was a wakeup call to me and it really kicked me into gear.
I also learned that there are two kinds of life insurance you can buy: term or permanent. Term life costs less and is the right product for anyone with dependents, debt and minimal savings. It is straightforward to understand and easy to buy. Permanent life insurance, on the other hand, is expensive and complicated. Financial gurus, including Suze Orman and Clark Howard, do not recommend it for the average person.
Final Thoughts
Who knows when I may kick the bucket and I truly hope it is not for a long time, but it is not something that we can know and I want to make sure that my daughter is completely taken care of when the day does come. I visited QualityTermLife’s website where I could comparison shop from dozens of companies who offer term life insurance. I chose a quote at a cost of a little over $20 per month for a $500,000 policy that will cover me for 15 years. Long enough to see my daughter through college, and I am confident that with my current savings that this amount will be enough for my child.
If you want to take out a term life insurance policy, you should explore your options and find out what the recommended amount is for your loved ones to sustain their way of life. You may be surprised at how much you need, yet how affordable it is. Knowing that they will be taken care of will allow you to close your eyes each night.
Dave Chen is the main contributor and owner of Millennial Personal Finance. He puts his extra time into his blog while handling life’s responsibilities including his job as an engineer, his job as a single parent, and his love for skiing (okay, maybe that one is more of a hobby).
