Wednesday, August 31, 2011

Protecting your family's nest: Make sure you have adequate insurance #FamilyNest

Thinking about insurance needs used to keep me up at night.  As a stay-at-home mom, I didn't have the safety net of having insurance through an employer and though my husband's job is secure, it occurred to us that having life insurance through an employer only was probably not the best thing to do, especially in our turbulent economy.  As we kicked around numbers, we had no idea if what we thought would be adequate was truly what we needed to purchase.  Whole life or term?  My head spun!  Finally, we made an appointment with an insurance agent that could answer our questions, give us an honest appraisal of what type and how much insurance we would need. 

All State and Social Moms have teamed up to help educate my readers about the importance of having insurance.  Here are some startling facts:

Did you know that half of Americans say they are under-insured? That’s 58 million* of us. And 70%* of people with kids under 18 say they would be in serious trouble if something happened to the primary breadwinner.
 Why this kept me up at night:  My husband is the breadwinner by far.  If something were to happen to him, I would have a very hard time replacing his income, let alone half of it.  With mortgages and other bills to pay, it would be impossible for me to sustain our current standard of living without the cushion of life insurance.  We needed to determine how much insurance we would need so that I wouldn't have to worry about selling quickly or even foreclosure if something happened to him.
Experts say a good rule of thumb is to insure 5 to 10 times your income. It sounds like a lot, but it’s really not. Think about what you’re really worth.  Life insurance will help cover the cost of your mortgage, medical and funeral expenses, continuing childcare, living expense and college tuition.
 What kept him up at night:   While everyone may joke that being a stay-at-home mom is a not a job since you don't get paid, the sad fact is that if you weren't home taking care of the children, you would have to pay someone else to do this job.  If something were to happen to me, he would need to make sure that he could afford childcare -- even a Nanny or housekeeping service -- if he didn't have me around. Another fact that should scare any husband into making sure his wife is adequately insured: estimates the average stay-at-home mom would earn $117,867 per year if she were paid for all the work she does.

So, where do you begin the quest to protect your family nest?  The first step is the hardest.  You actually have to stop procrastinating and commit to speaking with an insurance agent who will ask you questions about your finances, your health, your age, and any other important plans you have for the future.  This will help him or her determine what type and how much insurance you need.  For most people, their insurance needs are greatest while their children are young and their mortgage balance is high.  

Another thing I highly recommend is to get insurance when you're young and healthy (and thinner!)  They do take into consideration your weight as well as your overall health.  Obesity is not only bad for your health, but it's bad for your wallet when it comes to insurance premiums.  If you're a little bit on the heavy side with plans to lose weight, be sure to ask your agent if you would be able to get reduced premiums with a sustained weight loss at some later time. 

Don't forget the kids' educational needs when you are making insurance planning decisions.  Plan for college needs and, if your children are currently in a private school, be sure to plan for enough insurance money to cover their educational needs should something happen to either one of you. 

Most of all, you should keep up with premiums.  Lapsed policies don't do anyone any good.  If you can pre-pay for the year with your income tax refund, then you should consider doing so.  Don't be afraid to ask what the payment options are so that you can find a policy that fits your needs and your budget.

In the end, you'll sleep better at night knowing that you're family's nest will be secure if the unexpected should happen.  Now that we both have insurance policies, I don't even think about bad things happening at night anymore.  I know that if something happened to either of us, the other one would be OK financially.  Stop worrying about the what-ifs and look into your insurance needs.  When we paid our first premium, my husband said, "Why didn't we do this sooner?"  Don't let life get in the way and re-evaluate your insurance needs often to ensure that your insurance needs are still being met.

I wrote this blog post while participating in the SocialMoms and Allstate blogging program, for a gift card worth $50. For more information on how you can participate, click here.
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