Suze Orman offers 4 Life Insurance Tips during Life Insurance Awareness Month
It’s almost September’s end, but it’s not too early to remind everyone that September is Life Insurance Awareness Month. Life Insurance Awareness Month aims to educate consumers about the importance and benefits of life insurance. However, there is also a lot misinformation out there about life insurance. If you aren’t sure what to do, these are some tips from Suze Orman.
You don’t have to be wealthy to get life insurance
It is a common myth that low-income people don’t require life insurance, as they don’t have enough income to replace it. Orman said, “If anyone in your family relies on your income, then you should have life insurance.”
Also, don’t get too attached to how much money you bring home. If your family depends on your $30,000 per year salary, you will need to have a plan in place to replace that salary in the event of your death.
Term life insurance tends to be a better choice.
You can usually break down life insurance into term and whole. Term life insurance covers you for a set period. You’re protected for the rest of you life with whole-life insurance
You can also access your whole life insurance cash value in different ways. Wholelife insurance is more affordable. No payout is available if your term life insurance coverage ends and you don’t die.
Whole life insurance might appear to be a better deal at first glance. You should be aware that whole-life insurance can be more expensive than traditional term life insurance. This makes the policy unaffordable to many people. That alone makes it a reason to choose term insurance.
30 years coverage is not necessary
Term life insurance covers up to 30 year coverage. However, you don’t always need to purchase a policy for this length.
Let’s suppose you decide to buy life insurance at 45. At that point, your only child will be five years old. A policy that covers your child into adulthood may be what you are looking for. A 20-year policy might be enough. If you have a spouse that you wish to protect, a 20 year policy would offer protection up until your 65th birthday. At which time they will be eligible for Social Security benefits.
You don’t want life insurance that is too expensive
Many people decide not to purchase life insurance because they don’t have the funds. Orman suggests that you don’t go overboard with your policy’s mortality benefit, if you want to keep costs low.
The smartest way to figure out how much life-insurance you need is to add up the annual living expenses of your dependents or your annual contribution to them and then buy a policy with a 25-fold increase in that amount. If your dependents require $50,000 per year to pay their living expenses, you can ask me to buy $1,250,000 of life insurance policies — that is, one with a $1.250,000 death benefit.
Protecting your loved ones is only possible by putting life insurance in place. Take some time to learn about the basics of life insurance so that you can make an informed decision.