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- When I was pregnant with my first child, my husband and I decided to get life insurance policies. We wanted our family to be secure in the unlikely event that one of us died young.
- We got our policies through Costco and are happy with our rates — we pay $40 a month each for our policies, valued separately at $1 million and $500,000.
- We chose term life insurance because it’s much more affordable than whole life insurance and would cover us while our kids are young.
- Policygenius can help you compare life insurance policies to find the right coverage for you, at the right price »
Like many young couples, my husband and I totally changed the way we dealt with our finances when we had kids. We started saving more, opened a 529 college savings plan for our newborn baby, and even bought his-and-hers life insurance policies.
No one wants to think about the possibility of dying young. But when you have kids, you kind of have to. Here’s how we figured out just how much life insurance we should get, plus the surprising place we bought it.
We chose term life insurance policies
While life insurance policies are sometimes thought of as reserved for the primary breadwinners of a family, we decided to purchase one policy each for both myself and my husband.
We secured a larger policy for my husband, since his salary was our main source of income. And while he definitely makes more than I do as a full-time freelancer, we also secured a policy for me to cover not just my earnings as a freelancer, but also the cost of childcare since I provide that, too.
We decided on term life policies, which provide coverage for a set amount of time. Term life policies are much more affordable than whole life policies, which cover the insured for the duration of their life. Our term policies will expire in 10 years, at which time we’ll likely upgrade to whole life policies.
Since I was pregnant at the time of securing the policy, I was required to get a physical, while my husband wasn’t; different life insurance providers have different requirements, and many require medical exams for all applicants. The cost of your life insurance policy (and whether you’ll be approved for one) may depend on your overall health and any preexisting conditions.
How we decided on the value of our policies
Deciding the size of our respective policies was a bit trickier — and required some math.
For my husband, we secured a large enough policy — $1 million — that in the event of his death, I’d be able to pay off his student loans, put a sizable amount aside in my son’s 529 college savings account, and live at the exact same standard of living for six years. This would put my son well into elementary school, which would make obtaining full-time work much more feasible.
Worth noting: Federal student loans are usually forgiven if the loan holder dies, while other types of loans, including private loans and those that are cosigned, may not be forgiven, so be sure to read the fine print on your student loans regarding loan forgiveness.
My policy — worth $500,000 — is large enough to pay off my student loans, put a large amount in my son’s 529, and cover between five and 10 years of a nanny, depending on his or her salary and time commitment at the time. Since my husband works full time at a demanding job, paying for reliable childcare in the event of my death was an essential portion of his policy.
We pay $40 a month each for our policies.
Choosing our life insurance provider
I’ve written about my newfound love for Costco before, but I had no idea that it could be a one-stop shop for everything from toilet paper to jewelry to life insurance.
Costco doesn’t underwrite the policies itself; that’s done by a third-party company called Protective Life. For us, the rates were also much cheaper than with other life insurance companies.
Getting a policy via Costco was relatively easy. My husband, ever the bargain shopper, heard that Costco members were eligible for affordable life insurance. We called the store’s life insurance general number, filled out an application, I got physical, and a month later, we had our policies in hand.
Is life insurance the sexiest thing to spend your money on? Not really. But as parents of two with some complicated financial obligations, making sure we’re covered in the event of the unthinkable is well worth it.