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The 3 biggest things I considered when setting up my life insurance policy

The 3 biggest things I considered when setting up my life insurance policy

by Cheryl Lock
February 25, 2020

The 3 biggest things I considered when setting up my life insurance policy

The 3 biggest things I considered when setting up my life insurance policy

by Cheryl Lock
February 25, 2020


As far as estate planning goes, if you have loved ones in your life, putting together a life insurance policy is up there in importance, right along with creating a will and saving for retirement.

When we found out I was pregnant with our first child, my husband and I decided it was time to put together a policy. We were still relatively young — the younger and healthier you are when you set one up, the more likely you are to find the best deals — and we both knew we wanted to make sure the other was looked after should something happen to one of us.

The first part of signing up for life insurance was relatively easy — a couple of quick forms (the family health history did require a couple of calls, though) and a pretty easy health exam done from the comfort of our home, and that was that.

The second part — figuring out how much coverage we wanted — took a lot more thought.

How much coverage you want will ultimately factor into your monthly payments, so that's something to consider, but there are so many other elements to think about, too.

When it came down to it, these were some of the biggest things we thought about when trying to determine how much coverage we wanted for our own life insurance policies:

1. The home factor

We were still living in an apartment in Denver when we found out I was pregnant, but we knew that we wanted to buy a home. Although it was hard to factor in the price of a house that we didn't yet own, we had a budget for our future abode, so we kept that in mind when putting together our policy. We wanted to get enough coverage so that if something happened to either of us, the other would be able to pay off the house so that wouldn't be a worry moving forward.

Paying off a home completely doesn't have to be your ultimate goal with a life insurance plan, but even if you can factor in enough cash to allow your significant other to pay it off more quickly, that would probably be a big help during a very difficult time.

2. Our yearly expenses

We are already pretty strict with our overall budget, so coming up with those numbers wasn't difficult, but deciding how long we'd want the other person to be covered did take some thought.

Chris and I cover different expenses with our monthly incomes (for example, he takes care of our mortgage, utilities, cell phone bills, etc, while I cover our savings, the girls' 529s, our insurance policies and other things), and to lose either of our incomes would make a big difference.

When putting together our life insurance policies, we wanted to make sure that the other person would have sufficient funds to cover the missing salary for at least a few years to get back on their feet.

3. College coverage

Since I was pregnant when we set up our policy, we knew we would be factoring in at least one college education, but we also knew we wanted to have at least one more baby at some point in the future. We hadn't put much specific thought into college for our kids yet — as in whether or not we would cover their entire educations, how much we'd be willing to pay, etc. — but when putting the policy together, we knew we'd want that to be a factor, as well.

These big expenses all add up quickly, and they amounted to a million-dollar policy (including both term and whole life insurance), which still seems like a crazy number to me. The good thing about most life insurance policies is that you can make an initial decision, and then add to it later as your life circumstances change. When you have more kids, buy a bigger house, or pay off more of your current house or pay off any additional debts, you can always check back in with your policy to make sure it still suits your needs.

Putting together a life insurance policy does take some upfront time, but the peace of mind you'll get from knowing your loved ones will be financially secure should something happen to you makes it all worth it.

This article was written by Cheryl Lock from Business Insider and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to

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