Much Ado About Life Insurance

WARNING: Extremely boring post about life insurance follows. Go make some coffee.

Lately I've been obsessing about the fact that we haven't heard back on the application for life insurance for my husband that we filed more than a month ago. As a Catholic mother intent on growing her family, I've had waking nightmares about cleaning houses at night in order to feed our (five, six, nine?) kids, in the event my husband dies "prematurely" (Why it wouldn't be EVEN MORE of a nightmare for him if I should die, one usually doesn't speculate. It's always assumed that the husband dies first.) This causes me to wonder, "Is it an utter disaster if we can't get life insurance?"

Insurance salesmen will tell you that you NEED term life insurance if you have kids. In fact, they will tell you that most husbands are underinsured, most wives are uninsured, and that you need more insurance than you think--at least five times your income. What they won't tell you is that you don't need as much money to survive the death of your spouse as they say.

This needs hard-eyed analysis, because many Catholic families are tossed on the dual horns of a financial dilemma: the calling to raise up (and educate) saints for Christ, and the expenses that seem to be non-negotional necessities for raising families in a materialist world. One of these non-negotiables is term life insurance--hence my anxiety.

So let's examine this. First, what is the purpose of life insurance? You are considering a policy that costs, say, $500 a year for 20 years, for a total of $10,000. You are buying the assurance that you will have $250,000 in financial help in the event of your spouse's untimely death. The odds are against your spouse's early death, or they wouldn't sell you the policy. At what other time in life would you lay down money and gamble on not winning? In contrast, $10,000 in your bank account, or invested in CDs, is a sure bet that you will still have your $10,000, or more, regardless of what happens. But would that be enough?

Let's examine the costs a life insurance disbursement is designed to cover:

1. The mortgage. This is usually the first expense out of a life insurance salesman's mouth. But, practical housewives that we are, is it really conceivable that, in the event of your husband's death, you are going to attempt to maintain the same lifestyle you did when your husband was alive? Of course not. You take advantage of the denial stage of grief and move into cheaper lodgings. "But what about the memories?!" Prepay your mortgage and you won't have to worry about this problem.

2. The burial. This one costs less, is more obvious, and is actually necessary. A decent burial in a Catholic cemetery will probably run you at least $5,000. If you have no employer-sponsored life insurance or other savings, there are less expensive insurance policies that are designed to cover just this. Or, if your husband was in the military, they will bury him for free. Plus you get a flag.

3. The income. This is also a necessary expense, but let's be real. Life insurance is only there to provide a stop-gap to get you over the hump of losing your main income. It is not there to make you rich. It is not there to last forever. Eventually, you are going to need to line up another plan for supporting your family. Your judgment on how long that will take determines how much life insurance you should be buying.

4. College. Why do life insurance salesmen bring this up? I contend that this one is a boogeyman designed to make parents sweat. There are more and better ways to get through college than counting on your dad to die.

There may be other expenses, but these are the biggies. You need peace of mind, the salesmen say. And in a purely materialist sense, if this is the only way to get it then you need the insurance. But as Catholics, we don't put our trust in policies, we put it in God (it even says that on our money). Remember, all the "security" in the world couldn't save Job. He still lost everything. And until he learned to trust God, he didn't get anything back, either.

On the other hand, if you hang onto your $10,000, you've still got $10,000. And if you buy the policy and your husband DOESN'T die, you're out $10,000. If he DOES die, $10,000 may not sound like much compared to $250,000, but it makes a big difference how you spend that money. The $250,000 might run through your fingers like water, while the $10,000 becomes seed money for a business intended to support you and your family, or it pays for vocational training so you can get a good job to support your kids. The more I think about it, the more life insurance sounds like a scam perpetrated on people who think they can't afford to have a spouse die, but who pay anyway--when they would have been better off setting a little money aside.

So what's the solution? Briefly, let me outline my plan. As long as Dean is working, he can get some amount of life insurance through his employer at little or no cost. To handle the problem of transitional income I would, right now, make a six-month emergency savings account my highest financial priority. Common sense tells me that unless I lose all my faculties, I will be able to provide for my children in some capacity, with the help of God's providence. And if it did happen, I would move to an area with the highest concentration of sympathetic relatives.

So do we really need life insurance? Or are we just buying a feeling? Are we not, in fact, buying a kind of peace that we ought to get from God?

"As for you, do not seek what you are to eat and what you are to drink, and do not worry anymore. All the nations of the world seek for these things, and your Father knows that you need them. Instead, seek his kingdom, and these other things will be given you besides. Do not be afraid any longer, little flock, for your Father is pleased to give you the kingdom" (Lk 12:29-32).

UPDATE: Since writing this post, I have gone through some seldom-suffered writer's remorse. Of course, jettisoning a life insurance policy you already own is not a good idea, and there is no guarantee that God is going to "make it good" because you failed to make this provision for your family. I guess I was just trying to make myself feel better in the event that we absolutely could not get life insurance (BTW, we did finally get the policy!).