Life Insurance

Kiohud and I have decided we are ready for more life insurance coverage. We have had a lot of changes in the past four years or so and have not updated our policies to reflect those changes. I would never want to "leave" without knowing my family was being taken care of. Kiohud made the statement the other day "If anything happened to you, I'd have to marry pretty quickly because I'd need money". Half honest, half jokingly we laughed at the time and then I realized I would never want to put my family in such a tough spot. So here I am shopping for a bigger life insurance policies. Let me share with you some knowledge on life insurance...

Types of Life Insurance
Term Life Insurance- sole function is to pay designated person (Beneficiary chosen by you) a lump sum upon your death.

Whole Life Insurance- Pays benefit to your designated person AND also is a low risk savings account which is also tax deferred ( which means you don't have to pay taxes on this money until you use it) This plan lets you make fixed payments as long as you make payments as planned. The money is invested for you. You also have an option to receive payments from your account or withdraw from it in your lifetime.

Variable Life- This insurance is basically identical to Whole Life with the exception that this plan offers more flexibility to borrow from.

Universal Life- Again similar to whole life but you can earn interest at market rate on the cash value portion (the amount that doubles savings account) So basically it is more flexible than the above and has the potential to earn you more money.

Universal Variable Life-  This is the "premium life insurance". This account gives you more control over your money than any of the other accounts. With this plan you have all of the benefits of any of the other accounts plus you are able to invest in multiple accounts with more freedom. You are also able to borrow or make withdrawals in your life time however if you end the contract early you loose some of the money you would have been entitled to if you kept the policy full term. This account is for people that want to "baby" their account because you have to manage your own account and your success depends on the investments you make.

So- how much life insurance should you have?

 Well, that depends on your personal situation. Average life insurance is 2-6 times your normal income. But don't forget to take into consideration mortgage, children, college, etc. Basically, any expenses your family would have to cover without your income to help take care of them. I found this calculator it seemed to be pretty easy to work with http://www.insurancecalculators.com/


Life insurance is a lot cheaper than you would think espescially if you get it while you are fairly young. For Kiohud and I to get a 1 million dollar policy we are looking at 35-50 dollars per month depending on which type of policy and company we chose. If you are looking for a larger amount you will have to justify it with the company-  basically, they need to know you are worth that much money so be prepared to have financial documents ready. Also, you may be required to take a physical and get blood drawn to make sure you are in good health.

Also, I want to add that you can obtain most of these polices online now. However, I would suggest either calling your own insurance company (the one you have your home and auto insurance with) They may be able to give you a "bundle" discount (I hate Flo). You can also go down to your local bank or credit union and talk to the financial advisor there as they are usually certified to sell insurance as well. Part of my job (when I had a real job) was to sell life insurance policies so I am pretty familiar with this process already but this was a good refresher for me. I hope this helps your family as well- Good luck! :)