If you’re going to put in all the work to save for your family’s future, you should protect it as well.
Life insurance is a key component of every solid financial plan, yet it’s often the last thing most people want to think about.
More than 4 in 10 of those who went uninsured believed it was too expensive to buy coverage, the survey found. ValuePenguin polled 1,029 people online in May 2019.
“The reality is that most of us should get life insurance if we have people who count on us, who we love and who we want to make sure are protected in case we’re no longer here,” said Winnie Sun, managing director of Sun Group Wealth Partners in Irvine, California.
You may want to work with a financial planner so that you get your insurance coverage just right, but here are three steps that will take you in the right direction.
1. Find the right amount of coverage
A general rule of thumb is to buy enough life insurance to cover 10 times to 20 times your annual income in the event you or your spouse were to die, said Sun.
Chances are that if you have life insurance at your workplace, it’s not going to be enough to meet all of your family’s needs if you were to die.
Further, workplace policies often aren’t portable. If you parted ways with your employer, you would most likely lose coverage.
This means it makes the most sense to shop for a policy outside of your employer; often you can get more generous death benefits for less money.
For example, a healthy 30-year-old woman can buy $1 million of coverage for a 20-year term starting at $25 a month, according to Policygenius.com.
Consider working with a financial planner to make sure your insurance doesn’t fall short of your needs.
2. Look at your expenses
Fine tune the amount of coverage you need by drawing up a spreadsheet of the expenses you have to have covered.
“Maybe you want to make sure your house is paid off and that the mortgage bill goes away,” said Sun. “Maybe your car loan gets paid off.”
Talk with your family to get an idea of what your goals might be. For instance, you might want to have enough money to send your child to college with no debt.
To that end, Sun’s own life insurance plans account for the cost of paying for her child’s wedding.
“Have an active discussion with your family so that they know what you’re thinking, and so that they know what you’re contributing toward them and their future,” said Sun…Read more>>