Life Insurance: Term, Whole Life, or What?
I have two good friends who, as personal financial advisors, offer life insurance policies to their clients. One is all about Whole Life, and the other is all about Term. Since The Fiery One and I were married, I’ve been wondering which type of insurance policy I should choose when we have children. I knew I didn’t want to start paying monthly life insurance premiums until I had dependents, but it just wasn’t clear which of my friends was peddling the better policy (Not planning to buy through either of them, btw. I don’t like doing business with family/friends unless it’s very small-time/fun).
Well, the other day it all clicked for me. I realized that, for a person in my situation, there’s only one smart life insurance strategy. Here it is:
I’m young. I have my whole career ahead of me to make money, save, invest, and build a respectable retirement savings. The Fiery One is the same way, and if I were to die right now, she’d easily be able to support herself for the rest of her long, lonely, frugalCPA-less life.
Once we have children, however, she’ll have a more difficult time of it, especially considering she wants to stay home full-time with the kids to care for them. So life insurance makes complete sense for the years we have young children at home.
Once the kids are older and TheFieryOne is again free to work, life insurance no longer makes sense for us. The kids’ll be on their own (yes, we are kicking them out at 18 in a very loving, you-need-to-be-independent sort of way, though we’ll be happy to pay for their lodging during college), TFO will be able to work if she wants, and I’ll have accumulated a nice little portfolio of savings and investments that will, from then on, be what we can fall back on in case of my death or some sort of financial difficulty.
In summary, I only need a Term life insurance policy of 25 to 30 years, which starts when TheFieryOne gets pregnant (we’ll also get a small one for TFO to cover daycare costs and what have you should the worst happen). No more life insurance after that. I can’t see any compelling reason to have it when you don’t have dependents.
I do, however, plan to have long-term disability insurance throughout my working years, and long-term care insurance once I turn 55 or 60. Do you?
p.s. Ah, l’amour. There’s just nothing that says “Happy Valentine’s Day!” as effectively as a post about life insurance, is there?