We started contemplating term life insurance about four years ago. LaLa had just been laid off from our company and we were about to close on our first house purchase. Oh, and having poured all our savings into the purchase, we had no emergency fund (can you tell the layoff happened after the purchase, and before the closing? It did.)
We thought about a modest policy to basically cover the mortgage in the event of my death. And then we kept putting it off. We were quoted at approximately $40 a month for what we wanted and though it was a reasonable expense, we just never made it a priority to follow through.
A year later I was unemployed (the company folded) and LaLa was working a part-time McJob because the bottom had fallen out of the MA tech market and there was a glut of web designers out there and no jobs. We literally felt we couldn't afford $40/month at that time (you can save the penny-wise, pound-foolish comments for the end...I promise I have a point)
Then after a year of unemployment, I was hired to do a job that includes occasional travel and we resurrected the life insurance idea. LaLa's part-time web design freelancing was taking off, but bringing in modest income. With me traveling and bringing in the large share of income it seemed to make sense. The plan was that if anything happened to me, the insurance would pay off the mortgage and give LaLa the flexibility to move or sell while not really worrying about money. Procrastination continued to be a theme. It's been on a specific "financial to do" list for a year.
That's right, Internet...a year.
A few days ago it hit me. We don't actually need a term life insurance policy on me anymore. (And maybe we never did?). As Early Riser pointed out in his recent Festival of Frugality post:
And the truth is that as much as a death would truly suck and turn our world upside down, we can now afford it...financially speaking.
We have probably about $100k equity built up in our home (give or take, but that's a fairly conservative estimate of what we'd net on selling) and neither one of us would chose to stay living here. We have no children. In a couple of months we will have an emergency fund of about $10k and in the meantime we each have Roth contribution money we could use in a true emergency.
So the upshot is that if one of us dies...we have enough co-owned or personal funds to bridge the gap until the house was sold. Our house is in a very desireable neighborhood in Boston so I don't think it's worth it to worry about it selling if that was a necessity. Priced right, our house would fly off the market if that was the priority. Also LaLa's income has almost doubled and continues on an upward trend so our income disparity might not last very much longer ;)
We discussed it and it all fell into place. We realized that given our own personal situation, we don't need life insurance right now.