Life insurance is, at a minimum, an important factor to consider in any financial plan. I’ve said in the past that I don’t currently have my own personal life insurance policy. However, we do have small group life insurance policies through our jobs that had covered our needs at the time.
While it may be difficult to have the life insurance talk with your partner, it is a necessity and you should do it now rather than put it off.
What Made Me Reconsider My Life Insurance Choice?
Life changes. Your financial plan should, too. A few big things have changed since the last time we evaluated our financial plan which means we need to reevaluate our life insurance needs.
We Bought A New House
The biggest change in our financial picture recently is the fact that we bought a new house. We love our new house and are super excited about where we live, the extra space and the long-term suitability of this house for our future.
Unfortunately, we weren’t able to pay all cash for our new, bigger home so that means we had to make a death pledge. That means that both our debt and our cash outflow have increased significantly. Both of these factors increased the amount of life insurance we needed to feel comfortable should something happen to either one of us.
We Became Landlords
When we bought our new home, we didn’t sell our old townhouse. Instead, we turned it into a rental property. While the property cash flows well, if something happened where we didn’t have a tenant for an extended period of time things could get tight financially. This is especially true if one of us passed away and the second income was lost.
Another situation that could cause problems if one of us passed away would be large repairs to the property. We could easily work most repairs into our current monthly budget while we have two incomes, but if one income disappeared it would be much harder to cover the repair.
Due to these reasons, I need to make sure my life insurance would be able to cover any of these needs. If I have enough insurance to pay off the rental mortgage and cover any needs, I feel that would be a good situation to be in.
My Wife’s Student Loans Are Almost Gone
The other two items on our list were negative because they increased our need for life insurance. This one, however, is a positive that lowers our needs for life insurance. Once my wife’s student loans are gone, her expenses will drop off significantly.
That’s great news should something happen to me. In fact, it decreases the amount of life insurance I would need to ensure she is able to live comfortably should something happen to me.
Will We Get More Life Insurance Right Now?
After analyzing our current situation, we decided that we don’t need more life insurance than we currently have through our employers right now. We know that our lives will continue to change and we’ll continue to reevaluate our situation as those changes happen.
Unless we run into some major money in the few years, we know we’ll have to buy a lot more life insurance when we decide to have kids. When that happens, I’ll be sure to update you all!
If you want to become more knowledgeable about life insurance, make sure to check out this resource from Genworth.
When was the last time you evaluated your life insurance needs? What did you discover?