If you had a tree in your back yard that grew $100 bills for leaves, you probably wouldn't rest until you found a way to insure it. Otherwise it might wither, or someone might cut it down, and you'd miss out on millions of dollars over the next couple of decades. It's a silly analogy, but that's exactly what life insurance does. Unless you've inherited some serious money, your combined future income is your biggest asset. It's only prudent to protect against losing it.
You've probably seen a T-shirt or coffee cup that says "Life is Uncertain -- Eat Dessert First." Underneath the humor, there's a lot of truth to that. On any given day a lot of people are going to die, and most of them had plans for next week. A quick glance at your newspaper will tell you that young and healthy people aren't immune. Accidents, violence and unanticipated illnesses can come out of nowhere, and the result can be crippling for your loved ones if you aren't prepared.
Death is Expensive
If you have no life insurance and one of you has a fatal automobile accident next week, things are going to get expensive in a hurry for the survivor. Statistics compiled by the National Funeral Directors Association in 2009 showed an average funeral cost of $6,560 -- $7,755 with a vault. It can go a lot higher, depending on your final wishes and regional variations in funeral costs. The survivor may also be looking at legal costs, probate fees, estate taxes, and -- depending on your auto insurance policy -- potentially hundreds of thousands in hospital bills. Now imagine you were in the car too, and won't be able to work for a year or two. It really puts those monthly premiums into perspective.
Debt is Expensive
If your household budget relies on two incomes, losing one of them can make it hard to pay the bills. It's like trying to ride a bicycle with no front tire. Some people manage, but it's a heck of a balancing act. Your mortgage is probably insured, because lenders tend to insist on that, but the rest of your debt situation could be ugly. Take a look at your student loans, your car loan, credit cards and any other debts. Add up those payments and ask how you'd manage on one income. If you don't like the answer, it's time to talk about life insurance.
Dreams are Expensive
Imagine that one of you came home tonight and said, "Hey, about all our long-term dreams and goals? I've decided I'm never going to work again, so they're probably not gonna happen." It would probably result in a memorably heated conversation, because those lifetime goals are important. If one of you dies, the result will be the same. The immediate costs and lost income will probably put those dreams out of reach for the foreseeable future.
Waiting is Expensive
As any competent insurance broker will tell you, the best time to buy life insurance is right now. After all, if you were standing on a tightrope 100 feet above the pavement you probably wouldn't waste much time getting prices on a net. While you're young and healthy, you can buy an amazing quantity of life insurance for the cost of a good restaurant meal. The longer you wait, the more expensive it gets. Even worse, if it turns out you've got Great-Aunt Mary's heart, you might not be able to get it when you want it. Several websites can help you calculate how much insurance you should get, and how much it will cost.
Fred Decker is a trained chef and certified food-safety trainer. Decker wrote for the Saint John, New Brunswick Telegraph-Journal, and has been published in Canada's Hospitality and Foodservice magazine. He's held positions selling computers, insurance and mutual funds, and was educated at Memorial University of Newfoundland and the Northern Alberta Institute of Technology.