I’ll admit it…until about three years ago, I never really spent the time necessary to learn about life insurance. (Or any insurance for that matter)
For some reason, when you’re in your early 20’s, it just doesn’t seem like a pressing issue.
Once I started studying personal finance and we became debt free, I knew I needed to take it more seriously. And I learned I had actually done a decent job up to that point.
Before marriage, I would just select between $75-100k through my employer during open enrollment.
That amount was enough to pay off any debt, cover my burial, and tip my family for the awesome memories.
Then, by the time I started really researching life insurance, I was married. However, by that time, we were debt-free and had cut our monthly expenses down to a crazy low number.
See, the reason for life insurance is to replace our income in the event of death. Our expenses were almost that of a college student. This means that we could afford to live off of just one income without struggling at all should something happen to either of us.
So, based on the fact that there’s only the two of us, we’re debt-free, have close to a year of expenses saved, and more than our annual salary in liquid assets, a massive life insurance policy was not something we felt we needed to have…well… until now.
So for those that are new here, back in August 2017, we found out we were expecting our first kid. As I began to think through everything, I realized our tiny life insurance policies just wouldn’t cut it anymore.
If something were to happen to one of us now, the other would be on the hook for all of the expenses that come with being a parent and current expenses. The thought of my family struggling to make ends meet a few years after my death was more than I could handle.
It was definitely time for us to re-evaluate our life insurance policies.
The Life Insurance Process
I reached out to the independent insurance group Zander Insurance for a quote. They provide you with a few different options, so I took some time to research each one.
Once I decided which company to go with, the real process began.
I had a phone interview where we discussed my medical history at length. They also ask about family medical history and even wanted to know that I took a seasonal allergy pill. It was a little intense, but I definitely understand.
Once we got through that part, they sent someone to my home for a physical. They collect urine and blood samples and ask some of the interview questions again.
After that, it’s pretty much a waiting game. They work to locate all of your medical records from any doctors or physicians you mention during the interview process. Some doctors are a little slow on getting back to them so this could take a while.
Zander also assigns you a case manager. Mine reached out a few times to update me as things progressed. For example, one of my old doctors retired so it took a bit of extra work to get those records.
I started this process on Jan 31st and got the final approval yesterday, March 22nd. Zander advertises that the process could take anywhere from 4-8 weeks, so I’m glad I fell right into that range even with the doctor retirement issue.
So as you can see, getting approved for life insurance is a fairly simple process. I really liked that I always knew exactly where we were and what the next steps would be.
While I won’t disclose the policy amounts, I will say that we decided to go with a 20 year term life insurance policy for quite a few reasons.
For us, a 15-year term was the starting point. Based on our calculations and projections, we should hit our financial number for early retirement within the next 15 years. It was important that we select a long enough term to get us to the point of being self-insured again.
The second reason is we hope to have another child within the next few years. It was important that we have coverage until all of our kids are at least off to college.
Now, we can be certain that if something happens to either of us while our kids are minors, they’ll still be taken care of financially without having to completely drain whatever money we’ve built up by that time.
Also, we do have the flexibility to adjust the policy if it takes longer than expected for our second child.
I definitely recommend you find an independent agent to help you find the right policy for your family. This is crucial if you are married and have kids, a mortgage, or any other debt that will need to be paid off if you pass away.
You should, still, have a small policy if you’re single to cover any funeral expenses and debt.
Term life insurance is very affordable, and not something that should be missing from your financial plan.
Do you have a quality term life insurance policy? I’d love to hear from you in the comments below with additional recommendations on providers.