Advice Please - To Insure or Not To Insure

Posted on | November 29, 2007 |

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!

Related Posts for Further Reading

• No Related Posts

Comments