What it Was Like Purchasing My First Life Insurance Policy
A few weeks back, I reviewed a platform called Everplans that helps you organize important documents and info for your loved ones lest anything happen to you. On the heels of that, I penned a post all about preparing your finances for after your death. During the process of writing these articles, I couldn’t help but think about how I had yet to purchase a life insurance policy of my own.
That changed last week. On a whim, I went shopping for a policy and, within a few minutes, I was insured. So what was it like purchasing a term life insurance policy? What exactly did I buy? And what might I do differently in the future? Let me go ahead and answer those questions and more.
Purchasing the policy
Keeping with the “Well, I just wrote about this so…” theme, I started and ended my search by heading to Lemonade. While the company is best known for its renters insurance, they’ve expanded their offerings in recent years to include life insurance — as well as pet insurance, which I’m also currently considering. Anyway, I’ll do a full review of Lemonade life insurance in the future but, for now, I’ll just say that the process was very easy.
To get a quote, I had to answer a number of questions covering my health, family history, planned trips, and other such topics. Once this was done, I could not only get an overall quote but also toggle between different policy amounts and lengths to find the best option. Finally, after making my pick (don’t worry, I dish on what that was in a moment), I entered my credit card to seal the deal. Within minutes, my policy documents were already in my inbox. In other words, it was also quite simple and not nearly as scary as it might sound.
How much do you buy? And how long?
Surprisingly, something I didn’t put much thought into before getting a quote was how much life insurance coverage I’d actually need. So, I did what any person in my position would do: I Googled it. One of the first results I came across was a Dave Ramsey life insurance calculator. After answering some questions about my financial situation, I received… a prompt to enter my email address to continue. While slightly annoyed (albeit not surprised), I decided I was curious enough to continue and get my result. Based on my answers, the recommendation they came back with was a $450,000 policy.
That is not what I got. Granted, while I think that figure might be reasonable, I also get the feeling that Mr. Ramsey and I are viewing the need for life insurance differently (certainly wouldn’t be the first time I’ve disagreed with the man). Thus, while I appreciated the tip, I decided to go another way.
I’ll be honest and say that my decision really came down to getting a good monthly price while having a “decent” amount of coverage. With our household income coming in at around $50,000 right now, I thought double this would be sufficient in paying for any funeral expenses and helping my wife out for a couple of years — especially since, in theory, my wife could keep working so it’s really only my salary that would need replacing. In turn, I landed on $100,000 as my policy size.
As for the length of the policy, my initial thought was to just go with a simple 10-year plan. However, while playing with the slider Lemonade offered, I realized that a 20-year policy would only cost me 75¢ more per month. Since the idea is to lock in a good rate for as long as possible, I figured this was a pretty solid deal.
To recap, I ended up buying a 20-year, $100,000 policy for a total of $15.75 a month. And with that, I now have term life insurance.
Now, you may be wondering if we also purchased a policy for my wife that would go toward assisting me if anything were to happen to her. The answer to that is “not yet.” Why? Well, while I know we really should as it only makes sense, I’ll admit that I’m still wrapping my mind around the idea of paying monthly for something I’m likely never going to see benefit from. Ultimately, I’m sure she will end up getting a policy of her own but, for now, at least we got me covered.
At the age of 36, I’ve now officially purchased my first ever term life insurance policy — and it wasn’t nearly as difficult as I might have feared. In the end, I’m happy with my selection and feel good knowing that I won’t be leaving my wife in a bind should I pass away unexpectedly. Nevertheless, as someone who pays attention to nearly every dollar he spends, I have to admit that paying $15.75 a month for something as intangible as life insurance doesn’t exactly sit well with me. As a result, not only am I dragging my feet on having my wife purchase a policy of her own but I also wonder if I may have skimped a bit on mine. On that note, the good news is that I can cancel my policy at any time, giving me another chance at getting it right. In any case, I’m glad to have now crossed this money milestone off of my list.