Hello. I’m Kevin McCormally with Kiplinger’s Personal Finance Magazine here to talk about Life Insurance.
When you think about the things you’d really rather not think about, life insurance probably comes pretty high on your list. Not only does it force you to think about your mortality; it also means spending money for something you’d really rather not think about, let alone pay for.
On the good news side, it might not cost as much as you think to buy the protection you need. We have noticed that rates have fallen significantly in recent years. And, face it, ignoring the issue won’t make it go away.
If anyone is relying on you, you may need life insurance because, frankly, your financial obligations might outlive you. Insurance helps to provide you financial assistance and even if you’re not there.
But, how much insurance do you need? There are plenty of rules of thumb. Eight times your income. Ten times your income. But such easy answers are really just inadequate shortcuts. Two couples might have equal salaries, for example, but it’s silly to think someone with four young children needs the same coverage as empty nesters with no mortgage and a fat retirement fund.
Beyond pinpointing how much you need, you need to figure out what kind of insurance is the right kind for you. Term insurance – with its steady benefits and premiums for, say, ten or 20 years? Or permanent, whole life insurance that combines a death benefit with a savings component you can use while you’re alive.
Life insurance is a personal affair; not something to be solved by rules of thumb or online calculators. You might need professional help to get it right. The reward is the getting some peace of mind in knowing that you have the right protection for your family . . . at the right price.