Life Insurance: More Affordable Than Ever And Why Almost Everyone Needs It
There are a lot of good reasons to buy life insurance and it has become more affordable than ever. It used to be said that life insurance is ‘always sold but never bought.’ The thought behind this adage was that most people don’t wake up in the morning and plan to go out and buy life insurance. It is something we all know is available, but as easy as it is to buy, it is also easy to put off. This is why many people only have life insurance because of their interaction with a financial professional that ‘sold’ it to them.
I just turned 54 and my 10-year term life insurance policy expired last week. I carried a very large amount of life insurance when my children were still living at home. Over the years my need for life insurance has decreased, but I still believe I have a need for it today. Whether it is to leave your family the money needed to pay for your burial, pay off debts, or provide a nest egg for ongoing monthly income, it is an incredible tool to include in your financial planning. By the way, while I won’t spend a lot of time here debating the subject, I recommend the most affordable version of life insurance - Term. Whole life or universal life policies include investment and loan features which needlessly drive up the price. They are more often pushed by insurance agents because of the higher commission payouts.
How To Buy Life Insurance
The old school way of buying life insurance was usually through an acquaintance that would come to your home and make the sales presentation at your kitchen table. As a young boy growing up in Chicago, I saw my parents sit at our kitchen table several times with the ‘insurance man.’ In-home presentations are still going on today, but are less common. Like a lot of services the Internet has revolutionized, life insurance shopping has transformed in recent years. Now, anyone can go online and fill out a form in five minutes and have an insurance quote within hours.
Companies to consider:
How Much Will It Cost?
The rate will vary from one person to the next based on age, health, and other factors such as sporting activities, and whether you smoke or not. But most people are very surprised at how little term life insurance costs. For example, a young person in good health cam buy $1 million dollars of term life insurance for less than $30 per month. Term life insurance rates can be locked in for as long ten, twenty, and even thirty years.
How Much Life Insurance Do You Need?
An old rule of thumb was to multiply your income by ten, but some people today use a multiplier of twenty. Nerd Wallet has great resources on this and a life insurance needs calculator. There are many other considerations, such as how much debt a family has, college funding, how much savings are in place for emergencies, and retirement account balances, which is why using a life insurance needs calculator is necessary. An even better option would be to sit down with a fee based financial planner to review your life insurance needs within an overall financial plan.
Will I Ever Reach The Point That I Don’t Need Life Insurance?
Once you are debt free and have enough in savings and investments to take care of your family you may consider yourself to be ‘self insured’ and may have no need for life insurance. For most people, however, this day does not come until they reach retirement.
Helping you make the most of God’s money!
James L. Paris
Editor-In-Chief ChristianMoney.com
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