Advice Please — To Insure or Not To Insure

Again, I’ve got a puz­zling finan­cial ques­tion and I’m turn­ing to my read­ers for help.

To insure or not to insure, that is the question.…

Per­haps you’ve read my Intro­duc­ing The Cast of Play­ers post or all of my About Me post­ings and already have a bead on my finan­cial and health sit­u­a­tion.  If not, here it is in a nut­shell:  I’m 43.  The Hus­band is 72.  Together we have two chil­dren – both teens.  I have some health prob­lems but, with the excep­tion of what might have been a series of TIAs (mini-strokes), they all seem to fall into the chronic cat­e­gory (IBS, food aller­gies, Fibromyal­gia, Hypothy­roid, and Sleep Apnea).  The Hus­band, on the other hand, has “incur­able” can­cer (inop­er­a­ble Prostate can­cer no longer con­tained within the prostate).

The Hus­band has some life insur­ance (all together about $80,000).  Together with his share of the cor­po­ra­tion that he heads, his share of his father’s estate, his per­sonal invest­ments, and var­i­ous other sav­ings, etc., his net worth is close to $1 mil.  I have two IRAs with a com­bined worth of about $15,000 and I have a small life insur­ance pol­icy through work also worth $15,000.  I will inherit noth­ing but debt from my mother.  I believe my father is worth a siz­able chunk of change but due to his lifestyle, our dis­tant rela­tion­ship, and his cur­rent wife’s ways, I’m not count­ing on inher­it­ing a dime.

My con­cern is for my chil­dren should some­thing hap­pen to me before they are grown and grad­u­ated from col­lege.  If The Hus­band should die, the assump­tion is that I would take over as Pres­i­dent of the cor­po­ra­tion (I’m cur­rently VP) and con­tinue to draw his salary.  There would also be his invest­ment income and his life insur­ance poli­cies.  As long as I con­tin­ued to live a rea­son­ably fru­gal lifestyle, I could send the kids to col­lege and live a com­fort­able life.  But if I should die, things would be a bit more complicated.

This is one of those really dif­fi­cult con­ver­sa­tions that beingfrugal.net talked about last week.  Sev­eral months ago, when deal­ing with our insur­ance agent about new health insur­ance, I asked the agent to research life insur­ance options for me.  He did and gave me sev­eral pro­pos­als and price sched­ules.  Last night I brought the sub­ject up again with The Hus­band.  He just assumes that if some­thing were to hap­pen to me, he would take care of the chil­dren until they’re grown   Most of the time his I’m invin­ca­ble atti­tude is endear­ing and inspir­ing.  But ocas­sion­ally, like last night, it’s fright­en­ing and frustrating.

Although we’d all like to hope that we’ll live to a ripe old age of 105 and then just die qui­etly in our sleep one night, that unfor­tu­nately is not the most likely sce­nario for our pass­ing.  Odds are that at some point The Hus­band will need care.  I have dibs on that job.  I want it and sec­ond only to stay­ing healthy for my chil­dren, my desire is to stay healthy for him.  But life is not about what we want — most of us do not get to choose the time and cir­cum­stances of our death — it’s about deal­ing with the hand we’re dealt.

If some­thing should hap­pen to me, how would my minor chil­dren get through the rest of their grow­ing and school­ing?  I’ve been of the thought that I need to carry a life insur­ance pol­icy — at least for the dura­tion of their youth and school­ing.  The Son is the youngest and, at 13, I fig­ure he has about 10 more years of need­ing “coverage.”

So last night, after our awk­ward but open, lov­ing, and fruit­ful con­ver­sa­tion, The Hus­band agreed that I should call the agent and dis­cuss a $100,000 Term Life pol­icy.  His rea­son­ing — it will buy me some peace of mind.  But this morn­ing, I’m hav­ing sec­ond thoughts.

My main con­cern — and my main pur­pose for the insur­ance pol­icy — is to pro­vide some type of funds that the chil­dren or their guardian could access imme­di­ately upon my death.  If The Hus­band had pro­ceeded me in death, this would give the chil­dren or their guardian access to living-expense funds assum­ing that the rest of their estate would be tied up in red-tape for a while.  If I should die before The Hus­band, the pol­icy would sim­ply be invested and even­tu­ally pro­vide a cush­ion or add to the funds that they would even­tu­ally inherit.  It would be my hope that The Hus­band would make the funds acces­si­ble to the chil­dren in the event that they need to even­tu­ally pro­vide care for their father.

Now I’m won­der­ing if an insur­ance pol­icy is the best vehi­cle for meet­ing this very spe­cific con­cern — imme­di­ate cash for liv­ing expenses while the rest of the estate is set­tled.  Both chil­dren already have cus­to­dial sav­ings accounts.  Would we be bet­ter off fund­ing those accounts or a sim­i­lar accounts — enough to pro­vide sev­eral month’s worth of living/school expenses?  The Hus­band seems con­vinced that no one would have access to the insur­ance pol­icy pay­out any faster than they would any other estate funds.  The would defeat the whole pur­pose of the insurance.

Of course, the advan­tage of an insur­ance pol­icy is that the ben­e­fit amount is imme­di­ately worth the pay­out amount.  It would take us much longer to build up their sav­ings accounts to the same amount.  Another ben­e­fit of the pol­icy we’re con­sid­er­ing is that it would allow me the right of con­ver­sion with­out proof of insur­a­bil­ity.  At this point, I’ll be able to pass a phys­i­cal to qual­ify but there’s no guar­an­tee that I’ll be able to do that in the future.

Read­ers — I’d sure appre­ci­ate any informed wis­dom you care to share with me on this subject!

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