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Friday, June 12, 2009

What Good Is Life Insurance?

Is life insurance a death lotto?

We bought life insurance for 1 purpose, to cover the surviving members of the family should something bad happen. The amount of insurance on me, for example, was different than on Val. Mine is enough to carry the family for the rest of Val’s life. The amount Val has is enough to afford an au pair or some other type arrangement until the girls are both 18. If we both died, there would be enough money for the girls well into their 40s (although our target would be to cover them until they were 18). If either girl died, there would be enough to cover those expenses.

With us shifting our lives away from the “normal” life to one aboard and abroad, the question is, how much life insurance do we really need? After thinking things through, we’ve decided we don’t need any.

We view life insurance as a tool to allow those to carry on the life that was planned. Our financial models and changes in life towards the sailboat means that our cost of living have radically changed. The money we’ve already put aside in things like the 401K provide enough if something were to happen to any of us.

The question you should consider is how much life insurance do you really need? It sure is easy to tack on extra payout money, but that is morbid since you are betting on your own death! Get only as much as you really need, if you really need any at all.

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