Ask your broker about policies that include well-behaved, appreciative children.
I noticed today on my Mint.com account that my annual life insurance payment cleared. It’s not super-cheap — $635 for a $1 million, 30-year policy with State Farm — but it always gives me a twinge of satisfaction to write that check each August. After all, that sum is a small price to pay to know that my kids will have some financial security in the event I kick off unexpectedly. Since I am the primary breadwinner in my family, that annual line-item is my responsibility — not a luxury.
Apparently I am in the minority in that conviction. A recent State Farm survey found that just 34 percent of Americans consider life insurance to be essential to their financial plan. And the number of single moms who opt not to invest in life insurance is stunning. A 2011 survey found that 69 percent of single-parent households with kids at home are without life insurance, compared with 45 percent of married-parent families.
I understand why this is — single moms are poorer than married moms, so there is a sense that there is less to invest in insurance. But something else is going on. When you feel poor, it is hard to accept that others depend on you — maybe because you feel like you’re already dependent on others (whether that is an ex for child support, public programs, or family and friends who help you out). But even if those supports were to continue to support your children in the event of the worst, and even if Social Security kicked in, it would still be a rotten financial picture.
So buy life insurance. Here’s the basics.
1. Buy term. That is just a flat rate you pay each month or year for a fixed term — usually 10, 20 or 30 years. Don’t mess around with whole life insurance — a type of savings/investment policy that is complicated and not a very good deal.
2. Figure out how much you need. I just went through State Farm’s cute, animated life insurance calculator that did a great job of summing up my financial and family situation. As a general rule, you want to buy enough to pay off debt and support your dependents until they are through college. One general rule of thumb is to multiply your current income by 10 (so if you earn $80,000 per year, you would need to buy $800,000 worth of life insurance). However, that can be overly simplistic.
3. Get a quote. At the end of State Farm’s calculator you will get a quote from that insurer. NetQuote is another good source of quotes from a variety of carriers.
4. Buy now. Yes, you will get a price break if you quit smoking or get your weight down to a healthy number. But you also pay more with each birthday (the older you are, the more likely you are to bite the big one, after all). Plus (have you been listening to me here, ladies?!), you need coverage now. So just buy it.
5. Don’t let your policy lapse. If you do, your coverage will be canceled and you have to start the whole application process over — and prices are guaranteed to jump.
Disclosure: This blog post was written as part of a sponsored program for State Farm to raise awareness about the importance of life insurance. All views expressed are entirely my own, and were not influenced or directed by State Farm. I never promote products I don’t actually believe in. You can learn more about this blogger program and life insurance at GoodNeighbors.com, PlantingMoneySeeds.com, and by following #StartLiving on Twitter.
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