Why do I need Life Insurance?

I’m sure you’re wondering why I am writing about life insurance, since it is way out of my realm of travel and fashion. Life insurance is VERY important and I’ll explain what it is, why you need it, and how to understand the two types.

What is Life Insurance?
Life insurance is a replacement of income in the event of an unexpected death. In our family, Travis works full time and provides the majority of our household income. I work part time/free lance and provide a much smaller income. If something were to happen to Travis, I would not make enough money to provide for myself and Aurora and be able to pay our bills. If something happened to me, Travis would still be able to provide for himself and Aurora but would have lost a little bit of income. So, we have a larger life insurance policy on Travis than we do for myself. Aurora is nine years old. She does not monetarily contribute to this family so she does not need a life insurance policy.

What are the two types of life insurance?
There are two types of life insurance: Whole Life & Term Life. Whole Life insurance is more expensive and offers a “savings plan” which offers a terrible return rate (you’re better off investing your money elsewhere). Term Life insurance is easy to obtain and much less expensive. Term life insurance policies are good for a certain “term” (number of years). Term life insurance is the way to go.

How long do I need coverage?
Term life insurance policies are good for 10, 15, 20 or 30 year terms. Dave Ramsey suggests to buy a plan based on how old your kids are and how long you have until they move out for college. This is based on the fact that as parents we have a lot more expenses for our kids before they go off to college. Travis and I purchased a term life insurance policy within a year of getting married and when Aurora was an infant. We chose to do a 30 year term policy. When you are younger, it is easier to get a better life insurance policy since you are so healthy.
Read Dave Ramsey’s GREAT info on life insurance HERE.

How much coverage do I need?
It is suggested to get a policy that covers 10-12x your annual salary (pre-tax). So as an example, if you make $40,000 annually pre tax that means you should get a $4000,000 policy.

Where do I look for life insurance companies?
Fabric is a great place to look for insurance quotes. Learn more and look for insurance quotes HERE. You can also see Dave Ramsey’s trusted life insurance companies and get a quote on his website HERE.

I hope this article was informative and helpful in your search for finding term life insurance for your family!

Finding the fun everywhere life takes us!
Love, Olivia Michelle