First, the big disclaimer: I'm a dental hygienist, not a financial professional. This is just what our family did and why. Please talk to a licensed insurance agent or a fee-only financial planner before you buy anything. Your situation will be different from ours.
With that out of the way: we put off life insurance for almost two years. The twins were born, we were drowning, and "plan for your own death" did not make it onto the to-do list between bottles. It was only after a coworker's husband passed unexpectedly last fall that Dan and I sat down at the kitchen table one night and actually did it.
Why term, not the other kind
The basic choice is between term life insurance, which covers you for a set number of years and then ends, and permanent life insurance, which lasts your whole life and builds some cash value but costs a lot more.
For us, the goal was simple: if one of us dies while the kids are young, the other parent shouldn't have to sell everything or move in with relatives. We don't need coverage when we're 70 and the twins are grown. Term matched that goal, and it fit our budget. That was really the whole decision.
How we figured out how much coverage
This took the longest. We used the rough approach a lot of people use, and then adjusted. Here's what we added up for each of us:
- Replacing income: about 10 years of that person's take-home pay
- Childcare: if Dan were gone, I'd need more daycare to keep working. If I were gone, he'd need it every day, since he works full-time.
- Debt: Dan's truck loan and a small credit card balance
- A cushion for the kids' future: not a full college fund, but a start
- Final expenses: a funeral is not cheap, it turns out
We don't own a home, so there's no mortgage to pay off, which simplified things. But we did talk about wanting the surviving parent to be able to afford rent in the Bay Area, which is its own line item.
We landed on $1 million for Dan and $750,000 for me. That felt like a huge number when I first typed it into the spreadsheet. But when I spread it over 20 years of rent, daycare, and groceries for two kids, it stopped feeling huge.
Choosing the term length
We went with 25 years. The twins will be about 27 when it ends. Our thinking was that 20 years would end right when they'd be starting college, which is not exactly when you want the safety net to disappear. The extra five years added only a few dollars a month for us, so it felt worth it.
Getting quotes
We got quotes from three places: an independent agent a friend recommended, an online quote site, and the company that already handles our car insurance. The independent agent was the most helpful because she explained which insurers tend to be friendlier to certain health histories. Dan has slightly high blood pressure, and she knew which companies would likely rate him better.
The quotes were surprisingly close together, within about $8 a month of each other.
The medical exam
I was nervous about this for no reason. A nurse came to our house on a Saturday morning at 8:00. She took our height, weight, and blood pressure, drew blood, collected a urine sample, and asked a list of health questions. Each of us took about 25 minutes. The twins watched from their high chairs, eating Cheerios, extremely interested in the blood pressure cuff.
A few tips from our experience:
- Fast the night before if they tell you to. Really.
- Skip the morning coffee. Dan's blood pressure was better on his retake without it.
- Drink plenty of water so the blood draw is easier.
- Be completely honest on the health questions. The whole point is that the policy pays out when you need it.
Approval took about four weeks. I got the preferred rate class. Dan got standard, thanks to the blood pressure.
What we actually pay
| Who | Coverage | Term | Monthly |
|---|---|---|---|
| Dan (34, standard) | $1,000,000 | 25 years | $58 |
| Me (32, preferred) | $750,000 | 25 years | $31 |
So $89 a month total, locked in for 25 years. It's a real line in the budget, about the same as our phone bill. But it's the one bill I'm actually glad to pay.
What I wish I'd known sooner
It's cheaper the younger and healthier you are, and every birthday nudges the price up. We probably could have saved a few dollars a month by doing it right after the twins were born. Don't let the overwhelm stop you like it stopped us.
And again, talk to a licensed agent. Ours answered about forty questions over email without once pushing us to buy more than we needed. That was worth a lot to two tired parents at a kitchen table at 10 p.m.
