Life Insurance - questions answered

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Having life insurance is a necessity when you have dependents that rely on your income. My dad passed away very unexpectedly in 2014 and did not have life insurance in place. My mom depended on his income but fortunately they did not have consumer debt, my mom paid off their home shortly after and is now cash flowing her way thru college. The life insurance could have helped tremendously had he taken the time to get it. This is partly why I am so adamant that people get life insurance. It is inexpensive and worth it for those you leave behind.

I will address the most common questions that come up when I am talking about life insurance with people in my life.


How much life insurance do I need?
I agree with what most financial advisors and planners will tell you, at least 10 times the amount of your annual income. When JP and I were each making $50K, we each got a $500,000 policy on ourselves. When our income increased, we got more life insurance to make up the increase. And when that happens again, we will get another policy in place. It does not matter how many policies you have, just be sure they add up to 10 times your salary.

What if I am a stay-at-home spouse, do I need life insurance?
Absolutely, yes you do. If you are a spouse that stays home with the kids, your working spouse is going to need money to care for the kids should you die. You should figure out what that means, would you need to hire a nanny? After school care? Before school care? Just because you did not bring in an income from a company, does not mean you do not need life insurance. Your "income" is tremendous to your family and you need to put a value on it.

I have no dependents, do I need life insurance?
I would say it depends. I have had this discussion with my mom a few times. I tell her not to waste her money on life insurance. She says she needs it to cover funeral costs. I tell her that I will dig her a hole in the ground and push her body in it, done... just kidding. I do tell her that we do not need it and that we can pay the costs for her funeral when that happens. She would feel better if she had one to cover the costs, fine. If it makes you feel better to do that, then do it, but I would say that no one should ever rely on money from a parent or family member. And to me, this is no different.

I have life insurance thru my work, do I need more?
First of all, I would not even include this in your 10x your annual income that you need for life insurance. Secondly, make sure you do not have more than $50K at work for employer paid life insurance, otherwise you are now paying taxes on it. Any amount over $50K of life insurance provided thru your work is now considered income. That is not to say that if you have a $100K policy that $50K of that is income, it is the cost of the extra $50K of life insurance that is now being taxed to you as income. Double check, lower your life insurance at work and get life insurance outside of work. Just to drive my point home, if you leave your job you also leave that life insurance that was provided. It is easier and more convenient for you to just get your own policies outside of work so they are with you until your death. Anything you receive thru your workplace should be considered gravy. 

How much does life insurance cost?
Life insurance is relatively cheap. Unless you have serious health issues, you should not have any problems with getting a low priced life insurance plan. You can almost always find a provider that can give you quotes on what your price will be with your current health conditions. Sometimes they are not as bad as you think. The younger you are, the lower the price is too. Get it today. 
Where can I buy life insurance?
JP and I bought our life insurance thru Zander. You just put in your information and it shows you a bunch of policies you can choose from. You can also use other sites like PolicyGenius or any other online site you find. If you are in Texas and want to talk to a live person, I recommend Independence Marketing Group. They can help you with other insurance needs as well and are a great team to work with. Finding life insurance to buy is easy, no excuses.

 Next post, I will address the difference between whole and term life insurance.

 Any questions you have that I did not answer? Comment and subscribe.


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