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My mom died two years and eight days ago. She was 58 and a half. She didn’t get to see either of her daughters get married, she won’t get to spoil grandkids, and she won’t know what it’s like to grow old.
Losing a parent is something we all go through, but the universality of loss doesn’t make loss any less personal. However, losing my mom before I got married has made me… how do I put this… a morbid weirdo.
I say things to Brent like, “I’ll love you for the rest of my life, not yours, because I’m dying first.” Which he knows is bizarre, but also knows that in my twisted way, it’s also sort of sweet, because I’m telling him I don’t want to live without him.
I’ve always been such a romantic (ask my exes).
But you know what? Life is short, and in all honesty, none of us get to decide the length. So, we talked about it the other day.
Do we Need More Life Insurance Than We Have?
I’m self-employed, and right now, that doesn’t come with much in the way of a paycheck, so in a vacuum, since we’re living just fine on one income, the surface answer is “no,” we probably don’t need me to get more life insurance.
But then I remember how it felt to lose Mom. Is Brent really going to want to go back to work right after the funeral?
Probably not.
Do we have enough in short-term savings to float him?
Again, probably not.
The thought experiment is only one-sided, for two reasons. The first, as I already mentioned, is that I’m dying first. The second is that life insurance is a benefit provided by his company. We looked into it, the amount seems like more than enough.
So, I started looking into life insurance.
How Much Do We Need?
There’s a calculator that has you estimate your expenses in case of death.
Expenses
Final expenses prefills in at $15,000, and my experience with a funeral home says that sounds about right. Don’t even get me started on the business of dying, oh my goodness.
Outstanding debts other than your mortgage? I’m going to pat myself on the back here and also assume I live longer than the car loan we’re carrying at 0.9% and say zero.
Outstanding mortgage? Again, I’m going to make the bold assumption that I live past the closing date of my condo and look at the mortgage on the house only. That number is high, and if I think about it too much I get a little queasy, so I’m not going to write it down here. Moving on…
How many children require college funding? That’s a zero right now, but wow does this calculator drive home the point that you should really adjust your stuff every single time something in your life changes.
Income
Total annual income. This is embarrassingly low (again, FOR NOW! Dad, don’t worry, I have a plan!) to the point that this section is almost entirely negligible, but let’s play along anyway and say $20,000.
How many years should income be provided? Er… one?
What’s your current savings and investments outside of retirement? Um, not much on my income.
What are your current retirement savings? Oh! I got this one. $5500 a year!
What is the value of the life insurance in force on your life? Do not understand this question, so… zero?
Assuming Your Spouse Would Work Following Your Death
Which, given the above, is probably a fair assumption.
What is your spouse’s annual income? Again, I’ll write that down on the thing, but Brent’s income has been a little too public in the past, so I’ll keep it off this post.
How many years does your spouse expect to work? Um… I think that depends on how old I am when I die, right? 10? What do I put here?
Your spouse’s marginal tax rate? Well, I bring that down, but since we’re playing on assumptions, okay, I’ll leave it at the prefilled amount.
Extras
Estimated inflation rate: Leaving that at 3%.
After-tax net investment yield: Leaving that at 6%, mainly because I don’t really understand the question.
Analysis
This is the fun part. The interesting number. As the calculator says, this is the financial impact on my dependents.
And it’s just under $250,000.
So, that was an interesting thought experiment and one I want to come back to when my income situation changes or if my answer to the number-of-kids-who-might-not-get-athletic-scholarships-to-college question changes.
I like this calculator because I’ve always thought of life insurance agents as the sketchiest of all sketchy (it has to do with a job interview I had when I was broke) and this site is anything but sketchy. It’s fun in the same way Turbo Tax is fun, and once you’re done with your calculations, they recommend you talk to friends and family about who they work with.
Not sketchy at all.
