On your financial journey, there comes a time when you need to add something to the strategy that has nothing to do with saving, earning income, budgeting, or investing. That’s right! You have earned some money, pay off debts, invested, and now it is time to protect your hard work. I know what you are thinking: why or how does one protect his/her money?
The Why
WHY – Because you don’t want to lose it overnight after you have spent so much time and energy to get it. I always say that we are one step away from both breakthrough and breakdown. One unfortunate situation can put your financial journey back to the starting point or worse.
The How
HOW – Through insurance. There are many kinds of insurance, and you need to do some research to find out which one you need. But today, I’m talking about life insurance. More specifically, TERM LIFE INSURANCE. Term life insurance is insurance that guarantees payment (death benefit) to the beneficiary when the covered person passes away. Term = specific time frame. There are policies with 10, 20, 30, even 40 years term.
No one wants to think about that. But the truth is, we all know we are only visitors on this earth. It is better to be prepared than to leave your loved one with grief and bills.
The Who
WHO NEEDS IT – Anyone with dependents! If anyone depends on your income, then you need term insurance. I keep emphasizing TERM because you won’t have dependents forever. And, hopefully, you will be self-insured by the time you retire. Self-insured means that you have enough assets that you don’t need a 3rd party to assist in the event of your passing. In other words, YOU’RE GOOD!
Do you have a million-dollar stashed away that your family can use to cover expenses (mortgage, funeral, health care, living expenses) if you were to die today? Give the assurance to your family by purchasing life insurance. You can use Policygenius (www.policygenius.com) to compare different insurance. It won’t cost you $1M!
TAKE OUT THIS INSURANCE WHILE YOU ARE STILL YOUNG AND HEALTHY!
The good thing about term life insurance is that your premium won’t change for the term of the policy. Since your premium is based on your age, health condition, the younger/healthier you are, the lower your premium would likely be.
Would this be enough?
How much you need for term life insurance varies per person. The general guideline is that you need ten times your annual salary. If you make $50K, you need $500K coverage. Don’t think it’s too much. If you have a mortgage and kid(s), your spouse can use the funds to pay off the mortgage, pay for college, take time off to grief, and more importantly, feel comfortable knowing that they won’t miss a meal or be evicted.
I would not conclude this without stating this: the insurance is NOT for you! You will not get the benefit, but your loved ones will. It means that you are not just thinking about yourself but your legacy once you’re gone. I know this can feel overwhelming to think you have to take care of everybody. YOU DON’T. All you are doing is trying to better yourself and your family. Do what you can and leave the rest to God.
“Fun is like life insurance; the older you get, the more it costs.” Kim Hubbard
