On the Importance of Life Insurance to Financial stability
We need to talk. There are few sentences that instil such a feeling of dread as this one does, and it’s usually the prelude to a very difficult conversation. Honestly, in our house, it tends to be my wife who throws this one out, but here was one occasion when I was the instigator.
“Hey, we really need to talk about life insurance.” That’s how I started it. She put down the laptop and looked over at me. “Ok. Go on.”
So, I talked. I explained the life insurance benefits I had taken out and talked to my wife about what was in place to ensure that my experiences growing up would not be repeated should the worst happen. She nodded as I spoke.
I knew that it was far from her favourite topic to discuss, but her next words surprised me more than I thought could be possible.
“Ok, that’s helpful, but what if something happens to me? How will you cope?” Honestly, at the time she asked me, I had no response.
Given my history as I outlined in financial shock to financial stability, I always assumed that life insurance should be taken out by the main provider or so called ‘breadwinner’. At the time, she was coming to the end of her maternity leave and returning to work part-time, while I was still pulling full time hours.
I vaguely remember stuttering about how I would be able to care for our daughter and myself financially, but emotionally things would be far more complicated. “Yes exactly. So, don’t you think you’d possibly need to take some major time away from working to look after our daughter and try and deal with things? I need to take out life insurance too.”
In the league of difficult conversations, this one is high ranking. However, it’s also such an important one to have. For both of us, it was veering into very much unknown territory.
In the Afro-Caribbean communities in which both of us were raised, all too often, conversations like this were avoided, On the few occasions that they were whispered, they were usually accompanied by “God forbid”, and a rapid change of subject, rather than a plan of action.
This reluctance to talk about our worst-case scenarios is completely understandable, yet the truth is that death is sadly inevitable. We can’t control that. What we can control is putting a plan in place to support our loved ones should they find themselves without us.
As J.K. Rowling said, “To the well-organized mind, death is but the next great adventure”. So, we have made the following plan of action:
I have taken life insurance to cover expenses for the next 25 years if I’m not around. My wife (clearly paying attention to all my rantings) duly asked me to factor in inflation into these expenses as the cost of bills can only go one way
She has also taken out life insurance to cover 5 years of my income to give me time to completely focus on raising our daughter
We are still let’s just say “debating” some of the finer details which is standard with couples. However, we are clear that we will try our utmost best to ensure we have enough protection to ensure financial stability for those we have left behind
The two life insurance policies cost us a total of £55 every month but this premium depends on your age, your health, how much you want to cover for (which is called sum assured) and other factors
We have also put these insurance in Trust. This means that payout is faster as the insurance policy does not form part of your estate. Secondly, the likelihood of paying inheritance tax on the payout is minimised.
There are plenty of providers that you can speak to about life insurance. Make sure you do a thorough google search and shop around to find what works best for you. I’d be happy to give you some pointers if you don’t know where to start.
Life is unexpected – fact. We have no idea what tomorrow, the day after or the day after that holds. Living in fear is never the answer, but we should always hope for the best, plan for the worst, and be happy with great life insurance that makes sure that our loved ones are financially cared for even if we are no longer there.