Have life insurance Is it enough or maybe too much
Most parents know that they need life insurance. But many would rather have a root canal than shop for the best life insurance policy.
"People don’t think about, ’What will my family do if I am gone and not earning a living ’" says Peter Katt, a fee-only life insurance adviser. "The whole point of this kind of planning is to provide the family with maximum flexibility so they’re not stuck."
(1) Too often, parents make a quick decision, ignoring important considerations. Among their mistakes, one is that they do not buy enough life insurance.
(2) "They don’t think that the person who is not bringing in an income needs life insurance," says Greg Daugherty, executive editor of Consumers Union. But if that person dies, the other parent can’t stop working and usually has to pay someone to help care for the family.
(3) Katt recommended that one young couple should buy $3 million for the husband who earns $100,000 a year and $1 million for the stay-at-home wife.
At the same time, many families rely on employer-provided life insurance, but employer-provided coverage is rarely sufficient to support your family.
(4) Some employers provide a year’s salary, but that may also fall well short of the amount your family would need to maintain its standard of living.
Some employers let workers buy group life insurance through payroll deductions. That may be a good deal for workers who have health problems that would disqualify them for an individual policy.
(5) Another drawback is that if you leave your job, you may not be able to take your insurance. "Given the job market, most of us are not absolutely certain that our jobs are secure," Daugherty says.
(6) On the other hand, some families buy too much insurance. Not everyone needs life insurance. Some people buy life insurance for babies, which is unnecessary, unless the baby is a child model who is supporting the family, Daugherty says:
(7) . Single people and those who have no children to care for usually don’t need life insurance.
Katt says a man with substantial savings in stocks and bonds and other sources of income recently asked him how much life insurance he needs. "I said none," Katt says.
(8) A. Many employer-provided policies provide a death benefit of $10,000 to $25,000 — barely enough to cover your funeral expenses.
B. Families don’t always insure a parent who is staying home to care for the children.
C. "There are people who don’t need life insurance but have it and many more people who need it but are woefully uninsured."
D. The purpose of insurance is to replace the income that a family has been relying on.
E. "Even if you have a lot of insurance at work, it makes sense to have some more insurance on your own."
F. To make insurance more affordable, you may not need to buy the same amount of insurance for both parents.
G. Planning for your death is not a cheerful topic.
H. But if you’re young and healthy, you may be able to get a better rate on your own.