I stumbled across this great website Lifehappens.org. A great non-profit website that is trying to educate everyone on the need for life insurance. Their poster child is ex-NFL star Boomer Esiason’s and he has a very moving story.
So what type of life insurance and how much do you actually need? I figured I would break this out into most of the questions I normally get or better referred to as the real reason you aren’t buying life insurance.
Question 1. Why don’t you have life insurance?
Firstly this is for those who have no life insurance. I get it you hate paying for something you might never use. In fact I hope you never have to use it because that’s not a very fun situation for anyone. But, does this mean you should not have it? Why buy homeowners insurance or car insurance? You may never use either of those yet you buy both of them without thinking or even reviewing what may be the right amount for your needs. In fact you may never be in an accident or have major damage to your house, but what is the one thing we are all sure of? That’s right, we all know we will die someday, why not be insured when that day comes? (I know morbid right!)
Question 2. What is holding you back?
Perhaps you haven’t had any traumatic experiences in your life, so Boomer’s story doesn’t strike any chords with you. Plus, you have heard the stories before, people’s parent’s dying or friends dying, but that could never happen to you, because you are special! Okay, so maybe it’s more you hate life insurance agents, guess what I’m not a fan either! That’s why I became one, so that I could change people’s perspective. You see when you work with an independent agent, we can help find the cheapest or most reliable product that works for you. So really maybe it’s your fear that’s holding you back, Not knowing who to talk to for fear of buying something overpriced or being sold a product you don’t understand?
Question 3. How much do you need?
Of course there are general rules of thumb and guidelines that everyone can go by and the one for life insurance is 10. You need about 10 times your current income in life insurance. Very simply put, if you make $100,000 then you would need $1 million in coverage. As a rule of thumb this doesn’t work for everyone. It doesn’t take into account specific goals that you may have, debt you may have or anything else that isn’t in this ballpark.
Question 4. Who needs it?
Obviously not everyone needs it. Your 4 month old doesn’t need life insurance and if you were sold whole life insurance on that kid, I am deeply sorry you were. But, anyone with something to lose should have life insurance. This means any breadwinner of the family, stay at home spouse or those who want to leave a legacy gift. All three would benefit from having insurance for fear that if something were to happen then the one who get’s left behind is responsible now for all those tasks. Think of a stay at home mom. How much is she working while the husband is off at work? She is cleaning taking care of kids and keeping the house in order. How then is the father supposed to do that while working if something happens to his wife? He would need a caregiver and those aren’t free!
Question 5. How much is it?
A healthy 35 year old male, in California needing $500,000 for 20 years could pay ~$20 a month for Term life insurance coverage. That’s about $240 a year for coverage. The same male at $1 million in coverage is ~$38 a month. For most that is less than car and homeowners insurance. Of course the younger you are the cheaper that same coverage would be and the older and perhaps less healthy you are the more expensive it would be. Is that something you could afford?
The biggest thing you should remember is life insurance is just that, insurance, there in case you need it. You may never use it, but at least you have the comfort of knowing that if something were to happen to you, those whom you love would be taken care of. Don’t let cost stand in the way because there is always a solution for what you want, it’s about finding the best path to obtain it.