Money Mic: How My Dad’s Life Insurance Saved Our Family

Alden Wicker
Posted

Guardian
People have a lot of opinions about money.

In our “Money Mic” series, we hand over the podium to someone with an opinion on a financial topic.These are their opinions, not ours, but we welcome a constructive, thoughtful discussion.

According to a nationwide study conducted by LearnVest and Guardian, although 57% of respondents own life insurance, only 28% feel extremely confident in their understanding of life insurance–and 66% don’t have a good understanding of how to collect a life insurance payout.

Today, LearnVest Assistant Editor Alden shares a very personal story from her childhood, which drove home to her just how important it is for parents to have life insurance.

We are grateful that she has shared a story so close to her heart; in your comments, please be respectful.

December 1989. My father gathered up his things in his New Jersey office and headed to the door, eager to get home to celebrate the holidays with our family. A co-worker stopped him to chat. “Walter, what do you want for Christmas?”

“Nothing at all. I have everything I’ve ever wanted. I’ve got my three girls.” In other words, my mother, my 9-year-old sister and 3-year-old me.

Up in the Air

My father got his private pilot’s license in 1970 right after the army. “He absolutely adored flying,” my mom tells me. “He didn’t want to do anything else in his free time, besides hanging out with you guys.” He bought a small, used, two-engine Piper airplane in 1988 for commuting back and forth to his two offices in New Jersey and North Carolina. He was a careful pilot and took attentive–almost obsessive–care of his plane.

But just a few weeks before that Christmas, he had an annual inspection, and the mechanic said he was missing a small part for detecting fire in the engine, but he would probably be fine until that part arrived.

My dad climbed in, taxied out to the runway, pushed the throttle forward and lifted into the sky.

The Life We Had

Life was good for my family in 1989. My father was the well-paid president of a marketing company, and made extra income from his side consulting business. My mother stayed at home raising my sister and me. She hadn’t worked since 1980, when my sister was born.

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Mom and Dad had just moved us to a tiny town in North Carolina to be closer to family. They bought some land, started building their dream home and convinced my grandparents to build a little home nearby. After looking at the dismal public schools, my parents enrolled my sister in private school and planned to do the same for me.

In short, they had a lot of financial obligations that depended on my father’s income. But they were solid financially, with an emergency fund of about two year’s take-home pay.

My mother set the budget, handled the mortgage paperwork on our new home and paid the bills. Around the time I was born, she took a look at my dad’s life insurance coverage through his job. Many basic policies from employers will pay only about $30,000–not enough to support a family our size for very long.

So she set about calculating how much we would need if something were to happen, taking into account things like our mortgage and living expenses. She took out an additional term life policy to cover him, and a whole life policy for herself that was also meant to finance my sister’s and my college educations. (Here’s the difference between term life and whole life policies.)

She didn’t know at the time, but it would turn out to be the smartest financial decision she would ever make.

  • Becca Wildsmith

    Alden, thank you for sharing your story. It’s inspiring — your mom is a very smart, brave woman. (PS: You look just like your dad in the attached picture!) Wishing you all the best during this holiday season!

  • Kathleen

    My husband lost his dad when he was 11 years old. His parents had mortgage insurance on their house, which paid off the house and allowed my husband and mother-in-law, a stay-at-home mom without a college education,  to stay in it. My husband is grateful that he didn’t have to move on top of losing his dad.

  • Laura

    Wow. What a story. Your family is so brave! Thanks for sharing!

    I was also wondering if LearnVest could also talk about disability insurance – how that works, how to get it, etc. I cycle and I have a friend who was in a horrible accident last year. It seems like more and more cyclists are getting run off the road in terrible accidents. I think long term disability would be a helpful topic.

    • Kim Lohse

      Yes, this is a good idea.  People are trying to be healthy, riding to work and so on.  I dont’ know a single serious cyclist who hasn’t had a bad fall or accident related to cars on the road.  

  • cl

    Your story made me cry.  I’m so sorry about your dad.  I will look into life insurance now, though.  Thank you for sharing such a personal, sad story to get the point across that life insurance may seem like something to worry about later–or not at all, as has been my case–but how important it really is.

  • cara

    As someone who lost her father, and found out that he had allowed his life insurance policy to lapse just months before his unexpected death, I can say with certainty, it is the most important bill you should pay each month. My mother hadn’t worked in over twenty years and was faced with 2 children in private schools, and 2 children in college.

    If you never take advice from a stranger ever again, take it from me now: have life insurance and keep it current.

  • Anynomous

    My father also had great insurance when he passed away from a heart attack at the early age of 43. Our mortgage was paid off, monthly payments came in and we got money for university. Unfortunately, my mother went “wack” with the cash and spent it all. Trips, expensive gifts on new boyfriends, etc. Let’s just say her and I no longer talk. So along with the insurance, I would say a really good will that doesn’t give the post education fund money either to the spouse but to a 3rd person with no implications or with conditions (at 25 years of age, or something along that line).
    Good for your mom to hold it together and use the money wisely!

  • Anonymous

    my mother did something similar with my father, and kept it going even after they divorced.  When he passed away at age 55, she was able to collect almost 100,000 dollars on the policy(which she divided between me and my brother, since my dad never gave her child support after their divorce). I know my dad wanted to take care of me and my brother, but he just couldn’t seem to hold on to a job because he was an alcoholic. I think he would be happy to know(although late as it came)that in some form, he provided care for my brother and I when we needed it.

  • Billcluea

    More important for most is disability insurance,

  • Cjcsissy

    I am so sorry to hear of the loss of your dad. You have a very smart mother. All the very best to you and your family this holiday season.

  • Talia

    Thank you for sharing your story. Your Mom is both brave and inspiring! 

  • Tiffany

    really good advice- this is something we made a priority once i transitioned to a stay at home mom. thanks for sharing!

  • http://twitter.com/kgal1298 Kate G

    You are so lucky. When my dad died when I was 17 we were fairly lucky because we were older, but still it sucked mainly because my mom was horrible with money and because my dad was so ill he couldn’t get covered for life insurance so really it was me and her and it sucked and for about 5 years after that I paid the price of helping her out way too many times…at least now my finances are coming back up, but sometimes I wish someone in my family would have been smart enough to do something to the point of at least saving to help. 

  • Janetmakris

    Alden, I adored my father. After a long illness and at the moment he passed, I was climbing steps, felt this loss of strength, turned to my husband and in a panic said, “We have to go home.” As I walked in the house 6 minutes later, the phone was ringing and it was my sister telling me that our Dad had died. I was an adult so this isn’t about Insurance for mw but sharing a moment that I think our great loves are part of us, part of our souls. Deepest sympathy on losing your Father. Both of your parents sound like remarkable people.

  • Joanne

    Thank you for sharing.  A person may think at a certain stage of their life that they may not need life insurance, even later in life when mortgages are paid off and retirement investments are in place.  But, I am a firm believer that the cost of life insurance is well worth the investment. 
    Life happens, I know in our situation, our last child was a junior in high school, and we had our “plans”.  But, we ended up adopting our 2 grandchildren, (long story).  Right around 10% of the children in the US are being raised by grandparents or relatives; the same as we are doing.  Because of the economy, un/underemployment, and societal situations such as drug and alcohol abuse of the parents, it is becoming more prevalent for grandparents and relatives raising grandchildren or nieces and nephews.  Many families are moving back in with mom and dad and placing a huge strain on the budget and causing less for retirement.
    By the time our youngest child is graduating from high school, I will be 69 and my husband will be 71, what would be considered the retirement years.  Many of the heartbreaking stories I have read is people wondering how they will find the money for the second set of children they are raising.  We are starting fresh again, and are very glad we have good life insurance.  We at this point are going to have to reassess our life insurance. 

    I would also like to add that it is important for couples for both to have life insurance.  Even if one pulled out of the workforce and they are living on one income, if the person who is staying home dies, the other half of the couple if the children are elementary school age will have to start thinking of the added expense of childcare, as well as the funeral, etc. 
    Children can also be placed on a policy for an extremely small monthly premium. They then can pick up the policy themselves when they become of age, or out of college.  Sadly, children die, could the parents pay for a funeral out of pocket?  When my dad died 2 years ago, I was shocked to find out the cost of a funeral for a no frills funeral.
    I am so grateful Alden talked about the importance of life insurance.  It is just that, insurance for the unseen and for the future.

  • terri merritts

    This is one reason I suggest to young girls to get an excellent education, get a well-paid job or start a business, save money, and be capable of doing it all by themselves, not making the mistake of starting to have kids they can’t afford or leaving work and being vulnerable thinking a man will always be there to support them. Something similar happened to my own mom but she was a businesswoman and owner and had insurance too.