Life Insurance: Our Choice as Married Without Kids
I like to think of myself as a personal finance nerd. I enjoy reading articles that explain different ways to budget, a new way to save, or how I should invest. I often read these articles and come to similar conclusions, not always, but many times the simplest way to do things is probably the best. Some personal finance topics you might hear argued both ways, like paying off your debt (mortgage, student loans, etc.) vs investing; this is always a fun one to read no matter what side you are on. There are others that really need a personal touch, as I like to say you need to put the “personal” in personal finance. One topic that lays a pretty broad blanket cast over is life insurance; this is one of the toughest topics to discuss in the Even Steven Money household, since Mrs. Even Steven considers this a topic of how we will die or jokingly mentions that if we get life insurance I now have a reason to plot her death…..I think she is kidding;)
Let’s take a look around the blogosphere and see what the typical advice for life insurance is. One of the more respected blogs over at Simple Dollar in their Complete Guide to Life Insurance write that most Americans need some sort of life insurance, they provide a few examples that would be exceptions to this rule, but this would be a pretty small few.
A contrary approach from the Simple Dollar is none other than Mr. Money Mustache, those who read his blog are probably not very surprised at his thoughts on life insurance.
My wife and I have never carried life insurance on ourselves, and we consider it a compliment to each other: “I believe you would do Just Fine if I wasn’t around, because you’re a capable and independent person”.
What is your situation needs to be the first question you ask?
Well I am a married in our early 30’s; we have mortgage debt and a student loan soon to be gone from the picture. Both mortgages are covered with the rental income they provide, which plays an important role in our path for financial independence. We have no kids, only our crazy energy filled Siberian husky named Angel. We do rely in some ways on each other’s income and certainly our lives would change financially if income was not coming in from either one of us. However it would not cause us to lose our house(s), but it would probably cause us to slow down our financial independence journey, most likely with a sale of one of the houses, both of which have equity. In summary our financial situation would not be dramatically affected, things would no doubt change, but the changes would be minor in my opinion.
Do We Need Life Insurance?
Even after my brief analysis of our financial situation, I think it is in our best interest to have some sort of life insurance. It was something I thought on over the last couple of months, this will happen when you listen to Dave Ramsey every morning on your train ride to work.
So I decided to do some research and find out what would work best for our “Personal” Finance situation. What I came to discover that my work already covers 1x my annual salary in the case of my death and after asking Mrs. Even Steven to do some research at her company (we work in the same industry), found out they provide 2x her annual salary in the case of her death. Both of these policies are at no cost to us as they are provided as a benefit with our employment.
After talking it through and getting past the fact that I have no plans to plot any crazy murder schemes for life insurance, we decided we felt comfortable knowing in our financial situation and ages that having a small amount of life insurance would be more than enough to get us through that first year financially. Even Steven Money believes that our significant others are amazing people and have the strength and ability to move on financially with 1x-2x our annual salary. We understand the consequences if we move to a different job that life insurance could not be available to us, but based on our current financial projections we are getting ever closer to becoming financially independent and will rely on self-insurance of rental income, dividends, and any other passive income stream will provide.
Whatever financial decision you are making please make sure to understand your situation and what lines up best with your plan. While the Simple Dollar, Mr. Money Mustache, and Dave Ramsey our great financial resources please remember they do not know YOUR financial situation. Whether you are on this site to read my story and financial journey or you are here to compare your decisions with mine increasing your financial knowledge along the way make sure you are doing what is best for you by reading, comparing, and understanding your decision.