How My Dad's Life Insurance Saved Our Family

By Alden Wicker

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.

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.

When Bad Things Happen to Happy Families

My grandmother clearly remembers that day. On a step ladder at my grandparents' house, my mother called to my grandfather, "Dad? Come quick. I feel like I'm going to faint." My grandfather got her off the ladder, and she laid down for a few minutes.

My grandmother sees this as proof of my mother and father's tight bond, because at almost that exact time in New Jersey, my father radioed the airport, saying his right engine was on fire. A few minutes later, he radioed again, saying the engine had broken off and he was in a downward spiral. Those were his last words. The official report listed the damage to the plane as "destroyed."

My grandmother got the call from a friend of my father's, when she was in our kitchen with me and my sister. She kept her cool (remarkable, since she considered my dad one of her best friends in the world), calling a relative to come and get me and my sister. Then she drove home to tell my mother.

I was barely 3 at the time, so I don't remember much about this time. The only utterly sad thing I do remember is a vision of my mother sometime during the weeks after, draped over the steering wheel of her pick-up truck, weeping.

The thing is, life went on, and I have many happy memories. I remember my mother asking me a few months later what color I wanted my new bedroom to be. ("Pink!") I remember Mrs. Stamp's private pre-school, where I learned about cocoons and how to spell "cat." I remember walking, my hand in my sister's, on the way to our grandparents' house for a delicious Southern dinner of chicken and dumplings. I also remember my mother tapping numbers into her desk calculator, and the "chit chit chit" of it printing the results on ticker tape. She never looked at the numbers on the tape with panic or worry.

None of this would have been possible without life insurance.

If We Didn't Have Life Insurance ...

My mother was faced with a long list of sudden expenses: the funeral, lawyer fees for executing my dad's estate, a mortgage, living expenses, private school and/or child care, and attempting to save for two college tuitions. If not for life insurance, she'd be doing all that with no income whatsoever, no job experience and savings that would only have lasted a few years.

It wouldn't have been easy for her to get a job after nine years out of the workforce, especially in our tiny town. "I had no career to fall back on," she says. "I would have had to go back to school." She would have disappeared into the workforce and night school, and my sister would have been yanked from her school right after we lost our father.

We also wouldn't have been able to finish the house, which would have meant an unsellable home with a giant mortgage. It would later take us three years to find a buyer for the finished home.

Life insurance answered all those questions. "It's wrenching, but it's a relatively simple process," my mother says of making the life insurance claim. "You call up the insurance company; you tell them what happened. You fill out a form and you send in a death certificate." Then they send you a check. (Today, most life insurance companies actually refuse to insure people with non-commercial pilot licenses, presumably because of a rash of accidents.)

In our case, the life insurance paid off the mortgage, and provided enough for my mother to continue to stay at home with us until I was in high school. It funded private school for my sister and me through 8th grade. Although we had only paid nine years of premiums, we received a giant influx of money that would sustain us until my mom reinvented herself as an interior designer when I was in high school and reentered the workforce on her own terms.

Of course, life wasn't the way it was before. The dinner parties went away, overseas vacations changed to a week at the beach once a year and dining out a trip to Bud's BBQ. But I was happy. I never noticed anything was "wrong" until I realized in third grade that, hey, everyone else has a dad and I didn't. But now, as a grown adult, I realize how incredibly lucky I've been to have the life and opportunities I did. Things could have been so much worse.

The Advice My Mom Gives Anyone Who Will Listen

My mother has this advice for parents: "You have, have, have to get life insurance. Figure out what you can cut so you can afford it. It's much more important to have life insurance than that extra dinner out." Depending on your age and your health-see more about how to get quotes on policies below-a 20-year term life insurance policy with $1 million in coverage can cost as little as $50 a month.

Read Life Insurance 101 to learn about the basics. Then, use this checklist to take out a policy yourself.

Hopefully, you'll never need it. But as my family learned, bad things do happen. Life insurance couldn't replace my dad, but it did replace the income we depended on, and kept my childhood relatively intact.

Love reading other people's financial tales? Check out more great LearnVest-exclusive personal stories.

See more on Learnvest:
5 Ways Life Insurance WIll Save Your Family
10 Financial Things Every Parent Should Do
Life Insurance Made Easy ... Well, as Easy as It Gets

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Could have done even better if they had taken out term insurance only, and invested the difference for the college and retirement.

December 11 2012 at 3:59 PM Report abuse rate up rate down Reply

Just make sure your mother doesn't do what mine did. She remarried before my father' body was cold. She and her new hubby the lawyer ripped off my sisters and myself off for every dime! When it came time for college, wasn't a nickel left. Also discovered our medical insurance had been canceled years earlier. Better make sure policy is in some sort of trust for the kids.

December 11 2012 at 2:24 PM Report abuse rate up rate down Reply

Crikey, AOL is now running infomertial stories?

December 11 2012 at 11:23 AM Report abuse rate up rate down Reply

Here is some very important advice!!! I have life insurance as does my wife. NEVER admit on a Life Insurance application,"that you ever smoked anything", not even tried it one time, NEVER!!! Never admit that you drink alcohol, or ever drank alcohol in any fashion, was never interested in it, for any reason. My wife filled out her application and she had never drank or smoked ever. I had not drank alcohol in over 10 years and very little before that, for 6 years; I never smoked cigarettes in my life; but I had tried pot 18 years earlier. My wife got $600,000 Life Insurance for $18 dollars a month, at 34 yrs old Term Life, until she is 70 years old. If I had filled out the application as my did, I would have been Insured for the same monthly payment and the same amount. Instead, I was turned down for the Insurance by the Insurance company and many companies, as my name was added to a list, black balled! I finally did get Life Insurance later on, about 4 years later, for $500,000, but for over $150 dollars a month, ALL BECAUSE I CHOSE TO BE HONEST! Watch out what you have in your system when they take your blood, do your home work!
Good Luck, this is one time that honesty is not the best policy!

December 11 2012 at 10:26 AM Report abuse +1 rate up rate down Reply

Lots of talk about how lucky she was that she wanted for nothing in her life, even after her father passed away. Her childhood remained "relatively intact." What? Her father passed away at a young age and all she did was bless how they were able to keep the home, the dinners out, the private schooling, her new pink bedroom. No mention of the emotional agony a child experiences over the loss of a parent. Clearly an ad for life insurance. Ladies-let this be the better lesson....her mom was poorly prepared for real life on her own as an independent woman. Get married, have kids, get your life insurance for sure-but ladies...before you do all that...get yourself an education in a field that will provide a living for you and your family whether you marry or not. This mother was so dependent on her husbands income that losing it without life insur. to supplement would have resulted in near poverty for herself and her 2 daughters. That's the lesson here. Yes, life can throw bad things at us. Be prepared by your own merit.

December 11 2012 at 10:26 AM Report abuse +1 rate up rate down Reply

Yes, life insurance is important to help a family out in case of catastrophe. Especially in view of our poor economy. HOWEVER, this article is a major "plug" to sell insurance. I'm sure they had substantial policies, and it helps taking out whole life ins. at a young age when the premiums are lower. If you have ANY pre-existing condition, you are treated like a leper (just like with health insurance on the private market), and the insurance is either denied or the premiums are so high as to be prohibitive.

The fact of the matter is these people were extremely well off to begin with, so the big insurance policies they had, no doubt will carry them through life. If the story is real. No names are given, of course.

One only has to look at the heading on this page ... Daily Finance. Anything else you click on is an ad. And if you try to check out anything, your phone is ringing within minutes. I made that mistake by clicking on an insurance website and got phone calls for well over a year.

December 11 2012 at 7:49 AM Report abuse rate up rate down Reply

My college prof said if you want to find out how much your dad loves you, find out what he is worth dead.

Any single-income young couple with kids, with mom at home (or dad) that doesnt have life insur. on earning spouse, is simple irresponsible. No, I'm not in the insurance bus.

December 11 2012 at 7:00 AM Report abuse +1 rate up rate down Reply

I think this an ad for life insurance; however, it does make some important points that any parent would be wise to heed and to use as a lesson.

December 11 2012 at 5:06 AM Report abuse +3 rate up rate down Reply

Talk about "Living on the Edge."

December 10 2012 at 11:50 PM Report abuse rate up rate down Reply

Glad things worked out for her but if insurance were truly a good buy the insurance companies would be out of business.

December 10 2012 at 10:51 PM Report abuse -2 rate up rate down Reply
1 reply to BARRY AND KATHY's comment

Insurance is truly a good buy, one that you hope you won't use anytime soon.

December 11 2012 at 10:16 AM Report abuse +1 rate up rate down Reply