It’s truly appalling that so many people don’t consider term life insurance to be very important.
According to lifehappens.org, typical American families spend more money per month an Apple iPhone and Starbucks than they do protecting the important people in their lives with life insurance. Most don't realize that for a 35 year old male who's in good health, monthly cost for $1M of 20 year level term life insurance is less than the payment on an iPhone with AT&T(depending on the model financed, of course)
Life insurance doesn’t seem important until it becomes necessary, and then it's too late--it's like asking an insurance company to buy fire insurance when there's smoke coming from the front door! That’s because you can’t buy life insurance after the fact. What’s almost ironic is that life insurance is generally one of the least expensive types of coverage you can have, at least when you buy term life insurance. And though most people don’t give it much thought, it’s actually the most necessary.
We usually tend to think of life insurance in terms of providing a death benefit that will help support our loved ones after we die. That’s one purpose, and maybe even the most important.
But there are a few more:
Though it’s possible to do a relatively inexpensive funeral, you can’t do one for free! Even a modest funeral will cost several thousand dollars. If you have no life insurance, and especially if you have a few liquid assets, this could create a deep hole for your loved ones in the event of your death.
Since death is frequently preceded by an extended period of medical treatments, that can result in out-of-pocket expenses. For example, if your health insurance policy has a $4,000 deductible, and a maximum out-of-pocket of $6,500, your family could be stuck with those bills after your death.This is even more true in an age of Obamacare, where health insurance typically includes high deductibles and out-of-pocket maximums in order to make the coverage more affordable. But if you have no health insurance at all – and millions don’t – your family could be facing tens of thousand dollars in medical bills. Life insurance can prevent this.
Any loans cosigned by a family member that are outstanding at the time of your death will become obligations to your family. And even if a family member didn’t cosign for it but want to keep the asset, like car or house, those loans also become the obligation of the family. But of course, they will have to deal with those obligations without your income. This can stretch an already limited household income to the breaking point.Your life insurance should include a large enough death benefit to not only cover final expenses and outstanding medical costs, but also enough to pay for outstanding debts, particularly car loans and credit cards. If you really want to provide for your family, your death benefit will be high enough to pay off the mortgage on the family home.
After your death, your loved ones will be traumatized. This can lead to reduced income, due to missing work. It could also increase health-care costs, as the family experiences more frequent illness, as well as emotional trauma. A life insurance policy can help to offset these expenses, giving your family extra money to adjust to life without you.
Up to this point we’ve been focusing on the need to have life insurance on your own life for the benefit of your loved ones. But you should also strongly consider having policies on each of them. Any of the financial situations listed above that your family can face in the event of your death, can also effect you should one of them die.So to answer the question, who needs life insurance?, the answer is everyone! That includes newlyweds, stay-at-home-parents and everyone in your family.It’s often felt that single people have no need for life insurance since they have no dependents. But if you are single, and you have family – parents, siblings, and even nieces and nephews – you should still have some life insurance.At a minimum, you should have enough to cover final expenses, medical costs that anyone has paid on your behalf, and especially any loans where a family member has cosigned in order for you to get a loan.Cosigned loans don’t disappear because the primary borrower dies. The lender can still go after your cosigner. Having life insurance will prevent that outcome, and keep your family member from being pursued for full payment of the loan.
There are a number of reasons why people don’t have life insurance, but here are three of the more common ones:
If your budget is tightly stretched, it can be legitimately difficult to find money to pay for a life insurance premium. However, that should make you realize even more that if your household finances are tight while everyone is alive and well, it will be infinitely worse should one of you die.
In addition, there is a term life insurance policy that will fit virtually every budget. It’s worth cutting an expense or two to make room for this all important financial service.
Many employers do provide life insurance for their employees, but it usually caps out at a relatively low level, generally no more than $50,000. At today’s cost levels, that’s a very minimal policy.
And then there is also the problem that you could lose your life insurance should you lose your job. And when that happens, it may not be so easy to find affordable life insurance, particularly with no job income.
Some people don’t like to even talk about life insurance because it’s like betting on your own death. They may even reason that just the fact that you are taking a life insurance policy increases the chance of your death.
But the reality is that you will die someday, whether or not you have life insurance. And the only fair course of action is to have a policy in place, for the benefit of your family members.
Cost is a significant factor in making any purchase, including financial services like life insurance. But once you recognize the absolute necessity of having life insurance coverage, it’s just a matter of finding an affordable policy.
The best choice is term life insurance. It’s not just less expensive than investment type policies, like whole life insurance, but much less expensive. It’s possible to purchase a term life insurance policy for just 10% of what it would cost for a whole life insurance policy with the same death benefit.
That means that the $200,000 policy that will cost $3,000 per year for whole life, can be had for around $300 with a term life insurance policy.
The difference between the two premiums is that whole life includes an investment provision. The additional premium that you pay goes into the cash value of your policy, as well as payment of the many fees that are associated with whole life policies.
Term life insurance, on the other hand, is pure life insurance. If you buy a term policy, and invest the difference in premiums (between term and whole life) in an index fund, you will have better investment returns than you would by “investing” through a whole life insurance policy.
Term policies also provide you with the ability to match coverage with need. For example, your greatest need for life insurance is when your children are very young. Let’s say that you have preschool age children; you can take a 20 year term life insurance policy that will cover your family until your kids are adults. Once your kids are grown, you won’t need as much coverage.
You can do the same thing with your mortgage – match your life insurance with the outstanding balance on the loan.
The best way to shop for a term life insurance policy is through an online life insurance site like my term insurance site here. The advantage is that you can provide the information once, and then have the insurance companies come to you with quotes. This will give you the advantage of being able to make side-by-side comparisons, so that you can select the best policy for your needs at the lowest possible price.
If you’ve been delaying getting life insurance – or if you know that you don’t have enough coverage – start shopping today. Life insurance gets more expensive as you get older, which means now is the best time to get a policy. Go to the quote engine on the right side on this page and run private, instant term insurance policy options so you can see how much cheaper it is to buy term insurance than it is to pay for your iPhone!
Ok, so let’s say you’re 35 years old and have been married for seven years, have two young kids, and just got a great new job in Silicon Valley at Facebook, Google, Groupon, Linked-In, Twitter, Nvidia, or any of the many large employers in the San Francisco Bay Area( this goes for any other part of the country where there are mid to large size employers). let’s also assume that your spouse is a lawyer at on of the large law firms in the area and specializes in corporate law, is on a partnership track and will make partner in a year or two, and that you have full-time quality daycare for your two little kids, which costs about $2800 per month or more. Let’s now assume that you’re an avid cyclist and you and your friends cycle 60+ miles every Sunday morning up on Skyline Road, which while an amazingly scenic route, features long windy blind corners all over the place. You and your buddies usually stop at the same roadside cafe for a refreshment at the end of the major uphill crank. It’s the perfect midway point and there are tons of cyclists pulling in and out all morning long. One Sunday, after a gnarly crank up kings mountain Road, you’re really looking forward to cooling off and tanking up with some caffeine for the easier glide down to Woodside Road. Except this time, as you’re turning onto Skyline, the big rig truck doesn’t see you and you end up braking to a slide under his rear wheels… Now what? You’re now gone. You’ve joined the ranks of a bunch of other Silicon Valley cycling fatalities that happen up on the Skyline Ridge. You’ve told yourself that it won’t happen to you, that the other riders were going way too fast on the downhill and that they weren’t paying attention to road conditions. Well, you’ve told yourself a lie. This scenario happens way more than any 35 year old wants to admit. Recently, one of the early Amazon execs, met this exact fate while cycling on a weekend. She was not at fault, and she probably didn’t think it would happen to her either. Problem for you is that you had not had the time to accumulate the same wealth that she had because you’re 20 years younger than she was. Your salary was $190,000 plus options and benefits and your spouse was earning roughly the same. The new house in a nice neighborhood in Mountain View you purchased for $2.4 Million and daycare consumed most of your monthly budget. You were working until 9pm each night. You have a nanny that picks up the kids and feeds them so that when you and your spouse get home, you can spend some time with the kids and put them to bed without cooking a huge meal, so this is “quality time”. Then you realize that you signed up for the extra group life insurance that your employer offered during open enrollment, which just ended. Great news! Bad news is that it’s only $250,000 extra life insurance and that’s not nearly enough.
Suddenly you realize that you’re sitting at your desk and reading the WSJ article about the former Amazon exec who just crashed her bike and met an untimely death. What can you learn from her misfortune? To start you shouldn’t wait to protect your family with life insurance- that’s a given. Also, you learned that many employer group supplemental life plans don’t offer the amounts of coverage needed by most professionals and their families who live in major metropolitan areas of the US. In my scenario above, $250,000 just doesn’t cut it. Daycare expenses alone plus housing will eat up those benefits very quickly.
The first thing I think you should do is find out what the term life insurance cost is at work. Then, what is the maximum you can buy on the group plan? Now, once you have this information, go here to compare your term group term insurance rates with your own personal term insurance policy that you can get here on your own. You can pick the type of term plan- you’re in control! If you like a plan you see, then call us and we’ll be happy to help you any way we can to make sure your have all the information you need in order to protect your family. Make sure you get your instant term quotes now– you’ll be glad you did!