A few years back, my husband and I realized we needed more insurance coverage than just our renter’s insurance and our car insurance, we needed a life insurance policy in case of an unexpected and unfortunate event: death. We had been married for a few years, were still young, and discussed how our lives would be affected if one of us were to die unexpectedly. We had already been living on a combined income and the thought of losing half of an income due to death made us uneasy. We also worried that we wouldn’t be able to afford the cost of funeral preparations in such an instance.

Our renter’s insurance would replace any items lost in a fire or natural disaster, but only covered medical expenses, not funeral arrangements or a lump sum payout at the time of death. And our car insurance would only cover death in the case of a car accident. But what if one of us died crossing the street or falling from a ladder?

We researched both permanent life insurance and term life insurance. A permanent life insurance policy has a cash value, a small portion of the payments are invested. A term life insurance policy has no cash value, but the payments are usually much lower increasing in increments over time. Because we were young, our late twenties, our premiums for either type of insurance plan would be low. However, we had a budget of how much we could spend on a policy that would (hopefully) exist for many years to come.

After weighing the benefits of premium life and term life, we decided to purchase a term life policy for $100,000. This amount felt like just enough to help pay for an unhappy change of life event, cover any funeral preparations, and the lost salary for a short period of time allowing the surviving spouse to recover both emotionally and financially. We also chose this type of plan because we felt that as we became more financially secure in our late 40′s and 50′s, we may not need a life insurance policy. If we held onto our policy for 15 to 20 years, we would only have paid in about $12,000. This seemed like a good financial choice: pay $12,000 and in the event of an unfortunate death, one of us would receive $100,000.

What really made me choose against purchasing a permanent life policy was that when I was younger, I purchased a policy that I eventually cashed out. Feeling as if I might be tempted to repeat my actions, I decided that a term policy would keep it simple and safe. Neither of us would be able to convince the other to cash it out for a trip to the Bahamas, a flat screen TV, or a new car.

On our term policy, our payments would be based on our current health and age. I qualified for the lowest payment bracket, $10 a month. However, my husband, being a smoker, was viewed as a health risk. His monthly payment was more than three times mine, $33 a month! As shocking as the price difference was, we still felt it was a good option. For less than $500 a year, we can rest assured that in case of an unfortunate event, the other person will have some peace of mind knowing that they can take their time to recuperate and resume their lives without sinking into financial ruin.

Have you purchased a life insurance policy for your family? Which policy did you select and why?

According to an MSN article, there’s a high correlation between payday and death for some demographics (senior citizens, military personnel, tax rebate recipients for example). The theory states that for these groups of people, payday equates to spending money on riskier behavior. And riskier behavior can lead to a higher rate of death.

Take for instance drinking alcohol. For a person who is dead broke right before their pay check, they might not be able to go for a drink with their buddies very frequently. Yet as soon as that pay check hits their bank account, they go blow a few extra bucks on drinks. Now, most responsible adults make sure to have a designated driver on hand. Yet we can assume that a person who lives pay check to pay check might be more on the irresponsible side meaning they are more willing to forgo that designated driver.

Now assume the worst: More money + more drinks = car accident. Hence one example of death correlating with pay day.

Of course, just because there is a high correlation between two events doesn’t mean there is a definite cause/effect relationship. Although the theory may explain certain instances of death.

I know that in my case, the moment my pay check hits my bank account, it is immediately budgeted out for bills, savings, and some fun, but definitely not risky behavior. Though this might have something to do with being responsible and not living pay check to pay check.

Do you find that you indulge yourself more right after payday?

Now for some link love:

Excellent reads from this past week:

• Squirrelers with 5 Steps to Increase Your Savings. Who doesn’t want to increase their savings? This post offers some excellent, common sense tips for saving more money.
• Money Crush with Track Spending; Get What’s Important. This is a great complimentary post to Squirrelers.  You have to figure out your expenses before you know how much extra cash you have to save!
• Mighty Bargain Hunter with Cutting Payments as Late as Possible: More Trouble Than it’s Worth? I can see where hanging on to your cash for as long as you can is a great idea. But with barely-there interest rates, is it worth it if you end up paying late?
• Frugal Confessions with Pensions and Social Security: Will Your Benefits be Reduced? The answer for me is yes. My social security amount is so low, I’m pretty sure by the time my pension is calculated, I’m guessing I won’t be getting any SS.
• Couple Money with Agreeing to Disagree. It’s all in how a couple deals with major decisions. Of course, I’m most curious as to whether or not Elle had her baby yet!

A big thanks to those referring track to my site this week:

• Young and Thrifty
• Wise Bread
• Yakezie
• One Income Dollar
• Financial Samurai

Finding low cost options for traveling to a funeral.

Man, if you look at my last post and this one, you’re surely thinking I’m obsessed with death. Not so, I say. However, death is a certainty no one can escape. And with death, comes funeral services. And with funeral services, comes family members scrambling to make it to the burial service. With last minute travel arrangements underway, getting the best deal is imperative. This past week my husband’s grandfather passed away, it was his last remaining grandparent. (My last remaining grandparent died over 10 years ago and I attended his funeral.) He made the decision that he would travel to Nebraska for the services, and because it was financially too expensive for me to accompany him with missing work plus the additional cost of a flight, we decided I would stay home. I honestly only met his grandfather once 11 years ago, so I was okay with this arrangement. I’m sure you are now realizing why I’ve been focusing on death this week!

Since death is imminent, yet elusive, meaning you can’t pinpoint the exact date of death, booking travel arrangements last minute can become costly. I’m the financial accountant around here, so I’m usually the one in charge of searching for the most economical airfare. We had less than 4 days from the time of notice to the day of the funeral to book the flight. I immediately began searching multiple travel websites. Travelocity.com is always the first website I scope out since they were one of the first online travel sites, but one I’ve recently started using that searches multiple sites at once is Kayak.com. Not only does Kayak search their own database for the lowest fares, it gives you the option of searching an additional 5 sites (this helps me remember all of my options): Priceline, Hotwire, Travelocity, Expedia, and Airfare.com. Smaller browser windows pop up on your desktop so that you can literally compare their rates side by side. This is by far their best advantage compared to other online travel sites.

After glancing at all of the different sites plus the flights on Kayak, I found the best price and shortest flight time (very important since my husband hates traveling!) on Priceline.com. For under $600 we were able to book a round trip flight that would allow my husband to arrive the day before the funeral. Unfortunately, he had to say an additional day longer than he would have liked or pay twice the price for the flight. Funny how returning on a Saturday is half as much as returning on a Friday. Some tips if you’re ever in need of last minute flight arrangements:

• Search multiple sites, or use Kayak to do this for you, for the best price.
• Be a little flexible if you can. For instance, my husband made the choice to stay one day longer even though he really wanted to return a day earlier. Luckily he was staying with relatives, so the cost of a hotel didn’t have to be factored in here.
• If you know you have to book a flight for a funeral, do it as soon as you know the date of the funeral, don’t wait! My mother-in-law waited one additional day to book her flight and it cost her quite a bit more money.

Death is an uncomfortable topic for some, but it is an event that happens once in everyone’s life. Being able to attend a funeral of a loved one gives people closure, and being able to do that without going into debt relieves some of that stress.

On a side note, I didn’t contact the airlines directly and ask for a bereavement fare because in my experience, the online rates are usually less expensive.

Have you had to make last minute flight arrangements due to a death or emergency? What did you do to minimize the flight cost? Have you used Kayak for booking your travel needs?