Up until I bought my house, I never really gave much thought to purchasing life insurance. Prior to buying my house, I was single, had no dependents, was debt free, and had a fair bit of savings. If I was to die, my death wouldn’t put anyone in financial trouble, so there wasn’t really a need for it. Now that I have a mortgage, life insurance has come back on my radar.
The only reason I’ve given life insurance any thought of late, is my mortgage, otherwise, nothing in my life has changed: I’m still single with no dependents. I hate the thought of my parents (who are currently my beneficiaries) being saddled with that debt, should something happen to me. My first hint that life insurance and mortgages seem to be connected came when I was getting my mortgage. The mortgage specialist at the bank asked if I wanted mortgage disability and life insurance. Thankfully, I’d done a bit of research and had seen the CBC Marketplace special on mortgage life insurance, so I knew I’d be better off declining the bank’s offer and getting insurance on my own.
Life insurance is a tricky thing, there’s lots of options in terms of coverage, type of insurance (term vs. permanent), and of course insurance companies to choose from. My two biggest questions when it comes to life insurance are: do I really need life insurance, and if so, how much? I don’t view insurance as an opportunity to leave oodles of money to my beneficiaries in the event of my death (sorry kitty, you’re not going to find yourself on one of those richest pets in the world lists) or a way to have a really opulent funeral. Frankly, a plain ‘ole pine box would suit my corpse fine. The only reason I would want life insurance, is to make sure my debts (aka the mortgage) and the cost of putting me six-feet under would be covered, that’s it. Nothing more, nothing less.
I do have some life insurance through my work benefits. Right now, my coverage equates to 200% of my annual earnings. My annual earnings are approximately $54,000, so my coverage would be $108,000. That amount would certainly cover the cost of a funeral but not my entire mortgage, which is approximately $140,000. To cover my mortgage and a funeral, I figure that the amount of coverage would have to be around $150,000. However, there’s no reason my parents couldn’t sell my house to cover the mortgage since the mortgage is less than what the house could be reasonably sold for. I’m fairly certain that the house could be sold for $180,000 (at the lowest) and that it wouldn’t take too long to sell either, given the location, size and look of the place. Even if the house took a couple months to sell, my work benefits would cover the mortgage payments for a while. Given that, I’m not sure that I really need much more life insurance that what I already have.
Of course, should I find myself a man, settle down and make some dependents, I would absolutely re-evaluate my life insurance needs. As it stands now, I think everything will be covered if I kick the bucket. Have you given much thought to life insurance? What factors influenced your decisions regarding life insurance?
Have a good ‘un