We Had the Cutest Reason Ever to Buy Life Insurance

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Portrait of a cute baby lying on a bed.
Every one of us has had "aha! moments." Epiphanies. Days when we reach a crossroads and realize that we have to make some changes. For the next two months, we're sharing moments like those in our Life Stage Lessons series: Real stories straight from the financial lives of our DailyFinance contributors about times when they realized they were due for a serious course correction. So read on, learn from our mistakes, and get inspired to improve your relationship with your money.

Nothing puts things into perspective quite like bringing a new life into this world. My husband and I spent our first five years of marriage getting out of debt, building a small savings nest egg, and preparing every way we knew how for the day we became parents. And then that day came. Despite all our prepping, we quickly realized we had no idea what we were doing. We also realized it was high time to look into life insurance.

Buying life insurance before our daughter was born didn't occur to either of us. If the unthinkable had happened and either of us were left without a spouse, the survivor wold have been fine financially. We each had a career, and we were debt-free. But once we were affectionately titled "Mama" and "Dadda," all that changed. Our family now included a third human who had to be cared for and paid for -- and who couldn't earn her own keep. And that's when we got serious.

If you're in a similar place in your life, remember these three key factors:
  • Many employers provide life insurance as part of your benefits. You can add coverage through your employer's insurer (talk with your human resources department to see how those costs and policies stack up) or supplement your coverage with an outside firm. Since neither of our employers offered enough life insurance for our needs, my husband and I added supplemental insurance.
  • Figure out what it will really take to cover your needs. If you're married, ask yourself what would be on the line financially if you or your spouse passed away. And then calculate how much you'd need to make up that income, long term. A good starting point is 10 to 12 times each income. If you have unusual financial obligations, you may want an amount even higher than that.
  • There are two kinds of life insurance: term and whole. Most financial gurus recommend term life, and warn that the "benefits" of whole life aren't worth its higher costs in the long run. We ended up choosing a term life insurance plan.
Once you have the life insurance angle covered, you may want to look into other ways to prepare for the worst -- or bad situations that aren't quite the worst. If your spouse is the only one working, you could look into going back to school or honing a vocational skill to be workforce-ready. You'll never regret making sure both spouses are prepared educationally, physically, and -- of course -- financially in the event that something unforeseen happens. Most importantly, you'll be able to rest easy knowing your children will be provided for in any scenario.
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