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I'll admit that it's not a pleasant topic to talk about, but getting life insurance coverage is an important one and can offer the two of you some peace of mind should the unfortunate happen.
Starting early is a smart way to get your coverage at a lower price as many companies factor in age with their premiums.
Do Your Homework with Life Insurance
Many people want to jump right into the numbers, but I think it's vital that you also check out the companies you're considering to use.
The last thing you want is a company who is uncooperative. After all, it will be a difficult time for your family.
Review the company and make sure they have a stellar reputation for being reliable and paying out in a timely manner.
You can do this research for yourself or you can rely on companies like Life Plan (who specialize with Life Insurance in NZ) to present some options.
Deciding How Much is Enough
While there are certain general rules of thumb for how to figure the right amount of life insurance (8-10x your annual income), you really need to look at your family's specific needs. (I believe that stay at home parents should have a policy even if they do not earn income.)
Some things you may want to consider:
- Grieving: Losing a spouse/parent is life altering and your family needs time to grieve. Depending your family's financial buffer, you may want to have enough so the surviving spouse can take time off, either for themselves or the children.
- Final Expenses: You can get a ballpark estimate so your family will enough to take care of the funeral or cremation.
- Financial Assistance: Do you want to leave money for your spouse and children to cover debts and help with future expenses?
Keeping Your Life Insurance Up to Date
If it's been a while since you updated your policy and you've had some significant life changes, now might be a good time to review getting additional coverage as a couple. This is something we've done the last few years.
After we were married, we got policies that covered enough to take care of bills for a few years and funeral expenses. When we became parents, we significantly increased that amount – we wanted each other to have the option to stay at home and take care of our child if needed.
Now that we have another one, we're evaluating whether or not to increase. If we do, it won't be a large amount as the household bills would already be covered with our previous policies.
Thoughts on Updating Your Life Insurance Policy
I'd love to hear from about how you determined how much life insurance you needed. What factors did you include in your calculations? What type of policy did you get?
I received compensation in exchange for writing this post. The post topic and opinions are my own.