Life insurance is such a difficult financial hurdle for so many of you. You’re either queasy about pondering the need for it in the first place, or you are rightfully queasy about getting taken by an agent selling you a way-too-expensive policy.
Okay, I am going to make this super clear and easy: Answer these five questions and you will know exactly what to do.:
1. Is anyone dependent on your income? Such as a spouse, partner, child, parent, or sibling?
No: You don’t need life insurance.
Yes: Keep Reading
2. Do you expect that you will need to provide that financial support forever-say for someone with special needs?
Yes: I recommend you speak with a trusted insurance agent-ask friends and family for recommendations--about the need for a Permanent life insurance policy.
3. Do you want to protect a dependent for a set period of years: say until a young child is an independent adult, or until your mortgage is paid off, so a spouse or partner would be protected? Or to cover a one-time expense such as college costs or funeral expenses?
Yes: All you need is Term Life Insurance. Term insurance is very inexpensive, because it will be in place for just a set term-such as 10 or 20 years-not forever.
4. Do you want to make sure that in the event that you were to die prematurely your dependents would not have any financial worries?
Yes: Buy a term life insurance policy with a death benefit that is equal to at least 20 times your dependents annual income needs.
With such a large death benefit, your dependents will be able to invest the money very conservatively-say in high quality municipal bonds-and live off the income.
5. Are you okay with your annual insurance premium changing (becoming more expensive) every few years?
No: Of course you’re not!. Shop for a level premium term life insurance policy. And make sure it is guaranteed renewable as well. A guaranteed level term policy means that your annual premiums will never change, and that as long as you keep up the payments the policy will remain exactly as it was on the day you purchased it. You can shop online for term life insurance;
Suze Orman is a award winning certified financial planner and author of several books including 'The Road to Wealth'. She went from being a waitress at age 30, making $400 a month, to now having her own TV show and a net worth of $30 million dollars.
