Don’t Make This Mistake That Ended in Family Tragedy
September 29, 2016We’re all going to die someday…and many of us sooner than we think. It’s not pleasant to think about, but the consequences of not thinking about it can be much worse. For example, I recently heard about a family friend whose wife unexpectedly passed away, leaving him alone to care for their three children.
To make matters worse, she had just left a job and didn’t take the employer’s life insurance policy with her. It was the only one she had, and two of the kids are in college and too old to be eligible for Social Security survivor benefits. The third will only be eligible for another year or so. The father doesn’t earn enough to pay the bills but still too much to qualify for social services. Here’s how to avoid this mistake and ensure your loved ones are protected:
Make sure you have enough life insurance. Life insurance through your job generally only pays about 1 times your salary. If you have anyone dependent on your income, that’s likely not enough. You can use this life insurance calculator to estimate how much life insurance you need.
Decide where to buy any additional insurance you need. If your health disqualifies you from purchasing an individual policy, purchasing a supplemental policy through work might be your only choice. Otherwise, compare the cost at work with purchasing on your own. Just make sure you can convert any insurance policy you get at work to an individual policy when you leave and be aware that the premiums might increase quite a bit if you do.
You can search for low cost individual term policies at Term4Sale. (Term policies are much cheaper than permanent policies and are what most people typically need.) I like the site because they include companies that sell insurance policies direct since they don’t sell insurance themselves, despite the name.
Make sure you’re covered if you leave your job. This was the mistake of the woman above. See if you can convert your policy to an individual one or purchase an individual policy before you leave.
Buying life insurance may not be the most enjoyable part of financial planning, and it may not feel urgent. You never know when your loved ones will need it though, and by then, it will be too late. Don’t delay.