“…but in this world nothing can be said to be certain, except death and taxes.” Benjamin Franklin wrote this in 1789 after the US Constitution was written.
Most people would agree that this is true. We lament paying property, auto, sales, income, and every other tax that our elected officials exact from us. We hire CPAs, buy TurboTax software, and read about how to minimize out tax burden. But how many of us prepare for the other eventuality?
You are going to die.
There, I said it. If you didn’t know, you know now; sorry to be the one to pop your bubble.
Now that that’s over with, lets move on with preparing. By preparing I mean setting up your loved ones that you will leave behind to handle your parting financially. We all know of a family that lost it’s primary bread-winner and instead of having the ability to grieve for a while, had to put that aside and deal with a foreclosure, figuring out how to feed the kids, or watch as their cars were repossessed.
You don’t want to be that guy or gal who leaves their family that way.
One major way you can say “I love you” to your family is to prepare for your departure. It may not happen till you are 106, but it could happen tomorrow. It’s part of our responsibility as adults to face reality and prepare for it instead of thinking it can’t happen to us.
“Ok,” you say, “I get it, I want to love my family well; what do I need to do?” I’m glad you asked!
Life Insurance. You need it.
Why? Life insurance’s purpose is to replace you, financially, when you die. It is to be invested such that it produces enough growth (think interest) to replace your net income perpetually.
That’s it. If you have people who depend on your income you need this. If you are a stay-at-home parent, you need it to replace the economic value you provide (think child care, cook, maid, shopper, taxi driver, first aid provider, etc, etc).
Ok, so you get it, you accept that this is something you need. How do you navigate the hundreds of different policies and types of life insurance out there to properly care for your family without getting ripped off?
Lets use the K.I.S.S. principle. You need 10-12 times your income on your self (and $300-400,000 on the stay-at-home spouse) in 15-20 year Level Term Life Insurance.
Simple math: if you make $50,000 a year, you need at least $500,000 in coverage. Sounds like a lot, doesn’t it? What your survivors will do is invest this money into decent mutual funds and live off of the growth. A large amount helps to keep their income steady as the market fluctuates.
Sounds expensive, right? Most people can get enough coverage for the cost of a couple of pizzas a month! Do you love your spouse and kids enough to skip a few pizzas a month? Don’t believe me, check out this site to get an instant quote: Zander Insurance.
But what about Whole Life or Cash Value Life insurance policies? Why only 15 or 20 years of coverage?
Simply put, you don’t need coverage for your entire life. in 20 or so years, you will be debt free, the kids off to college, the house paid for, and have a healthy nest egg! [If you need some help figuring out a plan to get there, click here and I’ll help you.] With all that done, the need for insurance is gone! [Note: if that’s you, or you have no dependents, you have NO need for life insurance.]
In addition, the cost for a whole life policy can be 10 times the cost for the same benefit as term insurance. You could invest the difference and still be better off! Oh, and that cash value that the salesman told you about? They keep it when you die! I bet he didn’t tell you that!
So, what are you waiting for? Apply for a policy today!!!
Still have questions? Post them below and I’ll answer any you have!
