(2-3 min read) "painless, but informative we promise"
Happy holidays this July. The summer is in full swing with the climate in some areas of the states unbearable. Most of the people that I know still travel out of town or the next city over. With the economy being what it is these days most people are driving or in most cases flying. We here at the Keeping Up offices are not one to put a damper on holiday travels, but let's face it some topics still must be addressed.
Life Insurance, yes life insurance of all topics will be this month's feature. No one likes to talk about it, but it's just as important as planning that trip to Disneyland ® in the next few weeks. I will however do you a big favor and make it as painless as possible. Ok first things first if you think you don't need life insurance well that's just foolish. Even wealthy people have insurance, because they would rather keep the money that they have currently accumulated and let someone else write a check to cover estate taxes. Now that we got that, out of the way let's start easy then build up. DISCLAIMER HERE: We will never recommend one type of insurance over another. The reason being, we just don't know your particular situation.
Basics first:
Life insurance is based on two major factors and everything else revolves around them. i.e. features, bells, whistles, and so on. The two factors are AGE & HEALTH, that's it. Pretty much the younger you are the cheaper it will be, because when you are younger you are much more healthier. My grandmother reminds me every time I talk to her about all the meds she has to take. If you are a middle aged person then my 85 year old grandmother is a living witness that you will be taking meds somewhere down the line as things break down. The younger you are the cheaper life insurance is, however your occupation may come into play as you could pose a risk to the company that will insure you. Let's say you are 22, but you work on an Oil Rig for a company who's initials start with B and P then you would pay a higher monthly premium then say a 22 year old college student working at a coffee shop. Ok here is your bonus for reading this far and for recommending our newsletter to someone else. If you have a son or daughter on a social network site bragging about their club hopping or jumping from bridges or God forbid moving cars then they will be in for a rude awaking when they go and get insurance as well. These sites are checked for riskiness of clients and their free time activities. Enough said on that. I could go on, but I will pick that topic up in another post later on.
Term Life Insurance: (bike)
Is exactly what it is and does what it says it does. It protects you for a term and a term only. If you get a 5 year term policy then the policy will protect you for 5 years. If anything happens to you within this time frame then a check is written to your beneficiary in the amount specified. This is what we like to call temporary insurance, otherwise known as insurance that will cover you in an unexpected death. It is recommended that if you get this type of insurance then you get the biggest amount you can afford at that time. Example here would be for a young family starting out with 1.2 kids (whatever that means) and let's say they have a starter home very small of course. Say the home cost about $150,000 and the husband makes about $37,000. A nice amount to get would be about $500,000 worth of term insurance, Wow that's a lot! Not really, because the monthly cost for a 22 year old would be in the neighborhood of $18-$30 dollars a month for a half a million dollars. It's cheap and it's a lot money which is the good news. The bad news is 98% of term policies never get paid out, because people live past the term and never die unexpectantly in the that term. (but what if you did?) If something unexpectedly were to happen to the husband on the way home from work on the freeway, then the young mother has enough to pay off the house and support herself and buy herself time to figure out how life is going to be without her husband. The same can be said about getting insurance on the wife as she has a job (domestic engineer) all be it nevertheless, a job of taking care of the home. Well what if she goes out to check the mail one day or makes an errand to the local store and something goes wrong. Who would take care of the baby(s) so the widowed dad can go back to work? Not to mention he may need to take a few months off to adjust to the sudden death and change. This is all we will cover on in this post because we wanted to keep it to a 2 min. read. Part 2 will talk about Universal Life Insurance and Part 3 will talk about Whole Life Insurance and we will recap the reason why we call Term Life Insurance the "bike" product of insurance.
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