Lazy Man and Money

Doubling Up Our Life Insurance

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I recently wrote about out how I was looking into disability insurance. In that article, I made a mention that I really should review my life insurance. Why? Because with the birth of our second child our financial obligations have doubled. If either my wife or I died, the other would be left to support both of the children.

Not only that, but we have a few real estate properties. (It still feels odd to write that.) When we have tenants in all of them (and, more importantly, the tenants are happy) everything runs smoothly. However, sometimes tenants move on and we have to replace them with new ones. Then we have to start all over, not knowing what kind of people we are going to get. In the meantime, we still need to make the mortgage payments… at least for the next 15 years until we have them paid off. After that our obligation is reduced to upkeep and taxes, but they aren’t exactly zero. One person working full-time and taking care of the kids has enough to do without having to deal with the hassle of managing multiple properties. Life insurance could cover the cost of a rental management company to ease that burden.

The biggest question is whether to get whole life or term life. Whole life is when you have life insurance for the rest of your life. It can get expensive, because as long as you pay the premiums, they have to pay out the benefit. Term life is life insurance for a specific term. For example, we might get life insurance for 20 years. At that point our children will be close enough to being able to take care of themselves (we hope!), so we don’t need the same coverage to raise them.. I prefer term life. It is cheaper and fits my needs of covering our obligations. Life insurance terms and details can get confusing, so I like the simplicity of term life as well.

When we had our first child, I had to rush to get life insurance. It was one of the last things I had thought about and it hit me – this is not something that I can procrastinate about. I’m not sure if I got the best deal. This time, I can time my own advice: always compare life insurance and perhaps save some money.

I’ll leave you with a final thought about the term life insurance I chose. It is one of the few times that I’m happy to pay for a service that I hope I’ll never benefit from.

Can You Plan for Unexpected Expenses?

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When I think about the unexpected financial expenses the first thing that comes to mind is emergency funds. Most of the experts agree that having 6 months of income set aside for a financial emergency is necessary. In my head, that financial emergency is almost always the loss of a job. Perhaps that’s because I’ve been there when I lost my job in the dot com melt-down of 2001. (In many ways, I think that’s where the “work smarter, not harder” attitude of Lazy Man was born. I had worker pretty hard and rose up the ranks in the company – until the company was bought by another. All the social capital I created was worthless with the new management.)

While job loss is certainly a very valid reason to have an emergency fund (especially so in today’s economy), lately I’ve been thinking about bigger problems. What about health care? I have very good health insurance, but many aren’t so fortunate. What if my mom’s health care is lacking and I have to take care of her? What if my brother hasn’t listened to me about getting life insurance to ensure that his two newborns are provided for in the Worst Case Scenario? These costs can transcend the costs of 6 months of income.

Perhaps I’m becoming a worry-wart, trying to figure out all the ways that my hopes (and plans) for early retirement won’t be derailed. I can’t possibly cover every scenario, can I? I can’t have insurance for every possible occurrence, right? Yet, accepting defeat doesn’t right either. There are people who can withstand unexpected expenses.

I’m starting to realize that I not only have to plan for the security of myself and my family, but I have to plan for others as well. Does anyone else spend time thinking about this before it happens or do they simply react after the fact?