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"Why would I need life insurance when I already have some through work?"
When I worked as a financial adviser and was licensed to sell life insurance, that was a question I got asked often. Indeed, I found that many individuals who had life insurance benefits through their employers didn't see the need to have any sort of outside insurance coverage. Although I once felt that way too, working in the industry changed my viewpoint.
When I started my professional career, I was an auditor for a large bank. From there, I went on to graduate school and then started working as a high school business education teacher for five years. Throughout all these transitions, I didn't have my own life insurance policy and didn't see the need for it since I had benefits through my work.
However, when I quit my teaching job to start a career in financial services, my understanding of the importance of having an individual life insurance policy changed.
The life insurance horror stories that opened my eyes
As an adviser, I heard horror stories of people who were in accidents while between jobs or who died with no employer benefits. It was really sad to hear these stories and also consult with the individuals who were suffering because of the death.
No one wants their family to suffer when they die. That's where term life insurance comes into play. It's relatively inexpensive and can mean the difference between your family struggling to get by and continuing to keep the same quality of life.
Getting our own individual policies
Working in the industry forced my husband and me to start talking about and considering our own life insurance policies. Up until that point in our lives, it wasn't something that was a priority to either of us. We had been asked to consider purchasing our own life insurance policies before through our car insurance agents, but had brushed it off. Neither of us could understand why we would need it when we were single, and then once we were married we still didn't see the importance of having life insurance before we had any dependents.
After more research and much conversation, however, we felt it was time to take better control of our future financial lives and applied for a policy through the broker-dealer that I was working for at the time. It was a quick and easy process. We just had to fill out some paperwork, complete a medical exam at our home, and then wait for our results. Both of us came back as priority individuals, meaning we were in good health, and thus the rates for our policies were lower.
Deciding on the amount was a little trickier. We knew we wanted to have enough of a benefit to allow the other to stay in our home without worry if something were to happen to one of us. We also knew we would want more of a benefit once we had children.
As we started thinking more about the future, we realized it would be easier to just apply for the amount we wanted long-term, instead of only the amount we felt we needed before children. We learned that if something came up in our health, we would likely not be able to get the coverage we wanted later on, and also that it would be cheaper to obtain the full amount we wanted versus adding more on later.
Ultimately it came down to our big whys for having our own life insurance: If something were to happen to one of us and we had young children at home, we wanted to make sure the other spouse could stay home with the children if needed. We also wanted to make sure that we could pay off any remaining debts and that our lifestyle would be minimally interrupted. These factors helped us come up with the right amount of term life insurance to purchase. We settled on two 20-year, $1 million policies, one for each of us.
The bottom line
Going through the process of obtaining our own life insurance policies helped us realize that while we did have some life insurance through our respective employers, they didn't give us the amount we wanted our beneficiaries to have in order to continue living a certain quality of life. They offered some insurance, yes, but not enough.
We also realized that just because we had insurance through our employers didn't mean we would forever. We knew if we changed jobs, got laid off, quit, or decided to stay home as a caretaker (which is what I did!), we would no longer have that life insurance benefit through our previous employer. For us, there was no price we could put on knowing our family will be OK no matter what happens with our jobs.