There’s An App For That: Low-Cost Life Insurance
Many people dismiss life insurance because they think it’s too expensive, or already have a policy and feel stuck paying an exorbitant premium. But life insurance can be had for a modest price, and provide security for your loved ones if the unthinkable happened.
Who Should Get Life Insurance?
Single, Ready to Mingle
If you’re young & single without many financial responsibilities, odds are you need little or no life insurance at all. If you had student loans, car notes, or any other debts where a co-borrower is involved, they would be on the hook for your debts. When you’re young, that co-borrower is usually a parent; so be nice to your parents and take out a policy that will cover your debt expense, and list your parents as a beneficiary. And if you want to sail right through purgatory on your way to sainthood, take out a bit more to cover funeral and burial costs.
Married… With Children
If you’re married, and/or have children, take out a policy roughly 10-12 times your salary. That way the beneficiary (your spouse and kids) can live on the income generated from investing the policy pay-out.
Real-World Application: Term Life Insurance
Term Insurance
The theory behind term is that you buy a policy for a 20-30 year period. If you outlive that timeframe, your kids will be out of the house and your family finances will be under control; therefore you have no further need for life insurance.
Where To Get Term Insurance
I bought mine through Zander Insurance, an independent agency that can price shop for the best rates. For $75/month, both me AND my wife have 20-year policies that pay out $1,000,000 upon death. We’d better sleep with one eye open!
Does anyone have term, or other life insurance products? Are you satisfied cost-wise?
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You run into a value question. I would argue that term is the most expensive insurance cost wise. Only about 2% of all term policies every pay a death benefit. This means that 98% of the time you are just wasting money. With whole life insurance that is set up properly, you can make sure to get your money back and a lot more. I want to stress “set up properly”. This seems to be where most people fail, especially insurance agents. Cost is a relative term. What’s more important for you, cost or value?
Evan, interesting points. I’d argue that term and whole life have different functions. Term is truly used as an insurance product – to prevent financial calamity should you pass away. Whole life is an investment vehicle.
I’d be interested in how to “set up properly” whole life insurance, and how that compares to other options. Maybe we can do a point/counterpoint article about it?
As far as the context of this post, term insurance is vastly cheaper and can free up money in your household budget if you’re looking to trim the fat.
Great insight!
So true. Honesty and everything recongeizd.
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