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How to shop for term life insurance
It s distressing to me how few people with young kids have life insurance. The problem is the insurance that s best for people with dependents is not touted by the industry as a general rule.
Stay-at-home spouses have a special need for life insurance. A survey from Salary.com found that the salary such parents earn by dealing with laundry, kids, cooking, etc., is more than $143,000! That s more of an attention-grabbing number than anything else because stay-at-home parents don t actually earn that, but you get the idea.
Should a stay-at-home spouse pass away, the remaining parent would have to suddenly pay for childcare and everything else a stay-at-home parent does on a day-to-day basis. That s why it s essential the parent at home have a policy.
Why term life insurance is the way to go
Too often, we re sold insurance products with massive commissions and a high cost. That s a formula for failure when you have to pay the premium, and it sets too much of us up for a lapse in coverage.
A report found that 25% of people who buy life insurance stop paying on the policy in the first three years. By the 10-year mark, it s almost 50% of us who quit paying. So you pay all that money to wind up with a big, fat goose egg.
What you need is a policy that s easy to buy, easy to own and cheap!
Buying what s called term life insurance is simple and costs practically no money at all. SmartMoney reports that a 45-year old man can get a $500,000 level term policy with a coverage period of 20 years and only pay about $50 a month.
Women s coverage is even cheaper because they generally go to the doctor and take care of themselves! So if the stay-at-home spouse is a woman, you generally want to buy a level term policy for 15 or 20 years, depending on the age of your children.
Remember these pointers when shopping for a policy
If you re not into the internet, that s fine too. Go buy a money magazine and you ll see ad after ad of companies selling life insurance. Some respected ones I like include Amica Mutual, TIAA Cref, and even USAA.
Certain health conditions make insurance more expensive or even unavailable. If you have such a condition, you re what s known as rated in the industry, which means you will pay more money than the example SmartMoney gave for a 45-year-old guy.
Here are some pointers to keep in mind as you look around for level term coverage:
- How much life insurance do you need? The simplest rule is 10 times your income.
- Only buy life insurance where you work if you have health problems. Otherwise, I prefer you to qualify and go through medical underwriting so you can buy a policy on your own. Most of us don t stay at the same place forever and you may not have a right to take that insurance with you.
- Stay-at-home spouses who care for children should have insurance too. They have an insurable need because you d have to pay someone to care for your children in the event a spouse or partner dies.