We all have different needs and wants in our lives, but one thing most of us need is some type of life insurance policy. We all want to believe that we are invincible and that nothing will ever happen to us. And I hope nothing bad ever does, but according to Guinness World Records, (this is straight from their site) “the oldest fully authenticated age a human being has ever lived is 122 years 164 days by Jeanne Louise Calment (France February 21, 1875 to Nicolas (1837 – 1931) and Marguerite (neé Gilles 1838 – 1924), Jeanne died in a nursing home in Arles, southern France, on August 4, 1997 “. This just illustrates that we are not invincible and can only enjoy this life for a relatively short period of time, so we might as well be prepared.
In general, there are 3 types of life insurance: term, life and universal. Today I am going to talk a little about the term. It’s what my wife and I have personally (as well as our entire lives) and it’s what I believe the most. Why buy life insurance? Here’s the short answer that highlights some of the top reasons you should consider buying life insurance:
- Pay off your spouse’s mortgage
- Replace your income so your spouse can pay monthly bills
- Pay off any debt you may have so your spouse doesn’t have to worry about it
- Pay funeral costs
- Fund future needs such as the education of a child or the retirement of the spouses.
- Continue a family business
Term of life insurance
Today I am going to review term life insurance. Is what it seems. It is designed to last for a specific period of time. At the end of that time, or when the term ends, the policy is terminated. Generally, at the end of the term, the policy expires and you pay no more premiums and no money is recovered. There are variations of a term policy that allows you to recover money and renew it, etc., but I am only going to talk about a fixed term. The different variations should be discussed with your agent to see which one suits your needs. Term policies can be 5, 10, 15, 20, 25 or 30 years. You can choose the period of time you want the policy to be in force based on your personal situation.
Term policies are also the most affordable, mainly because they expire at the end of the term and you get nothing in return when it expires. I know that doesn’t make it sound like a smart choice, but it can be. For example:
Let’s say you are 30 years old, married, have a house with 20 years of mortgage left and a 5-year-old son. One option would be to get a 20-year term policy that lasts as long as the mortgage and long enough for your child to finish college. After that, you may not need as much life insurance. Let’s say your mortgage is $ 100,000 and you want your spouse to be able to pay the mortgage and have $ 20,000 a year to raise your child if something happens to you. $ 20,000 a year for 20 years plus a $ 100,000 mortgage total $ 500,000. That’s a lot of money, but it’s a realistic number your spouse would need if he didn’t come home the next day.
A lot of people look at that $ 500,000 and think there is no way they can afford that type of insurance policy. You can. A healthy 30-year-old man or woman who doesn’t smoke should be able to get a policy like this for less than $ 25 a month. I am willing to spend $ 25 a month for myself and $ 25 a month for my wife to make sure we are financially taken care of if something happens to one of us. I probably spend more than $ 50 a month on food I don’t cook on time or snacks at the gas station. If I can afford to do that then you better believe I will find $ 50 to make sure my family is taken care of. If you want a policy that pays you back when it expires, you will have to pay a little more, but at the end of the term you will get back all the premiums you paid. This is why term policies are so attractive. Lots of coverage for a low premium.
Many people still do not have life insurance to care for their families. There are many reasons for this. Here are 3 of the most common excuses people give me when I talk to them. Remember, life insurance is one of many tools designed to help your family prevent financial catastrophe.
1. I can’t afford it.
- I already showed you that it can be affordable. You don’t even need to get the exact amount you need. Just having insurance to make it a little easier for your family is better than nothing.
2. I don’t need it
- Do you have a spouse and / or children? Do you think that one day you could die? Then you should at least talk to an agent about the options that exist. Even if you are single, someone will have to pay for the funeral expenses if you pass away, so you may want to look for some insurance as well.
3. I don’t have time to meet with an agent.
- Seriously? Don’t have half an hour? How long is Chicago Fire or whatever your favorite show is? An agent will come to you and will be willing to work nights and weekends. Most of us can find a little time. Now there are even term policies that can be issued within 24 hours and do not require a medical exam. Policies without medical exams will save you all kinds of time.
Now, let’s go back to being invincible. They were not. None of us are. We have probably all benefited a family that had an untimely death that created not only emotional hardship, but financial hardship as well. So there was a benefit in the first place, because the family did not have life insurance.
In short, talk to an agent about life insurance. Just start the conversation. Find a trusted agent who has access to all the different options so you get what you need.