Seems like kind of a harsh question to ask, but I think it’s a necessary one. A number of years ago my wife and I purchased a $100,000 term life insurance policy on me. My rationale was that we were young and didn’t have much debt and that was enough to get my wife back on her feet after dealing with my death. Fast forward a few years and suddenly we had a child and a mortgage. We increased our life insurance policy to $250,000 and I also get roughly $150,000 through my employer. The insurance is cheap and is a level term policy for 20 years. My thinking is that by the end of the 20 years, we’ll basically be self insured and won’t need an expensive life insurance policy. I sure hope I’m right because life insurance for me when I’m 55 is going to be astronomically expensive.
How did we settle on the $250,000? Well, frankly it wasn’t very scientific. We knew we needed more than $100,000 and we thought $500,000 was excessive. After all, I didn’t want to give my wife any reasons to want me dead. I kid. Anyway, it turns out that the life insurance we have now will more than cover our mortgage and will give my wife and daughter the option of living in this house long term, regardless of how much she makes at her job. When you add in the social security benefits that they would receive until my daughter is 18, they should be more than comfortable.
Having this all lined up brings me some inner peace. I want to know that they’ll be okay if anything happens to me. My only hope is that we never have to use it.
