Being financially responsible so that the kids don't have to go through uncertainty along with the worst loss of their life, is the most thoughtful plan. For me, I haven't gotten it all figured out just yet. There are still so many questions! There is so much to plan for when it comes to parenting and at least some of it should be easy, right?
Here are some of my questions:
- Who do I go to to get life insurance?
- When do I get life insurance?
- What kind of life insurance do I need?
- How much life insurance do I need?
- How much life insurance can I afford?
- Will the amount of life insurance that I need go down as my children get older?
- Do I factor in college and weddings?
- How do I decide who gets what?
- Who will handle all of it?
- Does the life insurance automatically go where I want it to?
Who do I go to to get life insurance?
I like to research everything before I commit. I want to make sure I contact several places and get the most information I can. In any situation, I always go with the company that has the best customer service. I like to know going in that if I have any questions at any time or need to adjust my situation at any time I will be able to get through to someone and talk to a live agent. With life insurance as the main topic here, term life insurance quotes would be the best idea. I like to make sure that I am getting the best price before I invest my money in anything.
When you’re searching for a life insurance company, here are a few things to consider before choosing who to go with:
What kind of life insurance do I need?
There are different types of life insurance and knowing the difference will help you decide which works best for you. There are several options but these are the two I'm most familiar with.
Term Life Insurance- Term life insurance guarantees payment of a stated death benefit if the policyholder dies within the stated term period. Term periods may last anywhere from a year to 30 years. Importantly, term life insurance policies do not possess money unless the holder dies within the term. However, term life insurance may be less costly than other life insurance options, such as whole life insurance.
Whole Life Insurance- Whole of life assurance, sometimes called "straight life" or "ordinary life," is a life insurance policy that is guaranteed to remain in force for the insured's entire lifetime, provided required premiums are paid, or to the maturity date.
How much life insurance do I need?
Figuring how much life insurance you need will include many factors. Most insurance companies say a reasonable amount for life insurance is six to ten times the amount of annual salary. Some recommend adding an additional $100,000 in coverage per child above the 10x amount. The amount of life insurance you will need will depend on the financial obligations you have. If you have a mortgage you will probably want to have enough coverage to pay it off so your family can stay living at home. Once the kids are grown and no longer financially dependent you may want to adjust when you renew.
I am here to say from a personal opinion, that if you want to leave your children something by way of financial security, don't feel guilty if your budget doesn't allow you to figure in $100,000 per child. Go over your budget and talk with your agent; you will find they are very helpful in making sure your goals are met and affordable.
Do I need life insurance when my kids are grown?
This is one question that I felt can go either way. Do parents of adult children need life insurance? Do I want to make sure that I leave my kids something? Yes. Do I need to make sure it's enough to raise them and get them established as adults? No. Is there a simple recipe to calculate this? There is nothing wrong with making sure you leave a final financial gift to your children and of course making sure your last expenses are covered but you don't have to be so stressed out over it if they are grown unless they are still financially dependant on you.
Adding Life Insurance to your will
By adding life insurance to your will you will be able to make sure your beneficiaries will receive what you intend to give them. By allowing your will to do the talking for you, you don't have to worry if the executor or the estate will mishandle your affairs. Executors are legally required to abide by the will throughout the probate process, including the distribution of assets to the named beneficiaries of the will.
I hope this post helps you answer any of your questions as far as understanding life insurance. It's a big deal to make that type of commitment and of course we want to make sure it is done the right way.
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