Around this time two years ago, I’d just gotten married and felt a little like an adult for the first time. Things were changing for my husband and I including my last name, the way we filed our taxes and the way we handled our finances. So I wondered, aloud, here on the blog: do I need life insurance?
Eventually, I concluded the answer was no. My husband and I were 24 and 26, living on just $16,800 per year (less than half our incomes), with no mortgage and no children. We didn’t need life insurance just yet.
But is the same thing still true today?
Things Have Changed…a Little
Two years have passed since I last examined whether or not my husband and I need life insurance, so I thought I’d reassess.
Here are the main reasons one might need life insurance:
- You have dependents.
- You have debts (mortgage or car payment) that would be difficult for your spouse to maintain on one salary.
- Your spouse’s standard of living would be dramatically and suddenly affected by your passing.
My financial situation hasn’t changed much since the last time I examined these issues. I still have no dependents, and I have no debt. If I die, my husband won’t be left with a mortgage and daycare costs to pay.
The only thing that has changed a little is our standard of living. The last time I did this calculation, our annual expenses were less than half of our income, just $16,800 per year. Now we spend more than that, and it takes about 70% of our income. So if something bad were to happen, my husband’s standard of living would be affected.
But does that mean I need to buy a life insurance policy? Not necessarily. My husband and I both have life insurance through our employers amounting to a year’s salary. That would be sufficient to cover rent until the lease on our place ran out, and he could move to cheaper accommodations.
We even have enough cash saved to cover burial costs. I did a quick calculation using this burial insurance calculator and realized that the whole shebang could cost upwards of $10,000. Neither of us is interested in burial (we both wish to be cremated) so our savings would be more than sufficient.
No Life Insurance Yet, But Soon
So even though our financial situation has changed a little in two years, my husband and I will remain among the many millennials without life insurance. That said, my husband and I will both be getting a policy in the next two years. Why, you may ask? Because word on the street is that after you turn 30, premiums for term life insurance jump. My husband is 28, so I’d like to lock in a good rate now while he’s young and healthy.
As for disability and critical illness insurance, well, I’m still very behind on that. But that’s a story for another day.
Do you have life insurance? When did you get your policy? How much is it for? I want to know!
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