Learn how much life insurance you need and where to get it.
Money Girl
285 MG Who Needs Life Insurance? You Do!
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Hi everyone. Thanks for downloading the Money Girl Podcast. I'm Laura Adams, the author of Money Girl Smart Moves to Grow Rich. You can download two chapters from the book for free. When you visit my blog by the same name smartmovestogrowrich.com. If you think life insurance is only for wealthy people or single parents, you're in for a big surprise. In today's episode, you'll learn seven situations that beg for life insurance, plus how much you need and the best places to get affordable quotes. September is Life Insurance Awareness Month, which makes it the perfect time to consider how life insurance can be the key to reaching your goals and achieving financial security. The spokesperson for the 2012 Awareness Campaign is Master Baker and Reality TV star Buddy Velastro, known as the Kegbos. From a young age, he dreamed of working alongside his father in the family bakery, but his dad died when he was 17. Buddy had a dropout of high school to run the business and oversee 30 employees. He says things could have been a lot easier if his dad had owned life insurance. Research shows that about 70 percent of Americans understand the value of life insurance and how it can give them peace of mind. However, about 30 percent of U.S. households or 35 million people don't have it, and about 50 percent of those who do have life insurance say they don't have enough. Life insurance is so important because it protects people who depend on you financially if you die. It pays one or more beneficiaries as soon as you pass away, so they can pay expenses and replace your lost income. One of the top reasons people who need life insurance don't buy it is because they think they can't afford it. But here's the rub. Studies find that consumers actually overestimate how much they believe life insurance costs by as much as three times. Did you know that if you're in your 30s or 40s, you can get a 10-year term life policy that pays half a million dollars for around $20 to $25 per month. In my book, that's a bargain. Here are seven situations which should trigger you to buy life insurance. Situation number one, you're the breadwinner. If you are the only person earning money to support your household, you need life insurance. Think about what would happen to your spouse or children if you weren't alive. Would there be enough to pay for ongoing expenses like a mortgage, rent, or daycare? Situation number two, you anticipate funeral costs. It's hard to believe, but a traditional funeral that includes a burial can cost over $10,000. Consider what kind of funeral you want and whether your family could afford it if you didn't have life insurance. You can learn more about how to calculate funeral costs and the decisions that grieving family members and friends have to make if you don't pre-plan arrangements in the funeral consumer guide on the Federal Trade Commission website. With this resource in the transcript for this show, just go to quickanddirtytips.com, click on the Money Girl page and look for episode number 285, called Who Needs Life Insurance You Do. While you're there, also follow links to connect with me on social sites like Facebook and Twitter. Situation number three, you have debt. If you have debt in your name only, no one is responsible to pay it except you, even after you die. The money in your estate must be used to settle your debts. And if there isn't enough, creditors are generally out of luck. But if you have debt with another person, such as a credit card or loan that you cosigned, that's another story. Anyone named on a joint account with you would be responsible for 100% of the debt if you die. Having life insurance to cover outstanding debt on joint accounts is very important. Also, if you're married and live in one of the nine community property states, your spouse may still be responsible to pay debt acquired during your marriage, even if it's in your name only. I love learning, and anything that makes learning easier. If you're a parent and your child needs some homework help, then Ixcel is a right for your family. Ixcel is an online learning program for kids covering math, language arts, science, and social studies. Ixcel has interactive practice problems for topics from pre-K to 12th grade, and everything is organized by grade and subject. As kids practice, they get positive feedback, awards, and explanations for wrong answers. Ixcel figures out what your kids need more help with and recommends more topics to practice. There are videos, lessons, sample problems, and learning games, too. One subscription to Ixcel gets you all subjects and all grade levels. Membership started just $9.95 a month. It's no wonder Ixcel is used in 95 of the top 100 school districts. I think the positive feedback that Ixcel gives is really crucial when it comes to learning. So make an impact on your child's learning, get Ixcel now, and money girl listeners can get an exclusive 20% off Ixcel membership when they sign up today at Ixcel.com/moneygirl. Visit Ixcel.com/moneygirl to get the most effective learning program out there at the best price. Before butt-naked underwear, going out naked was a negative. Grocery shopping in the nude? A big no-no. Sunday service in the buff? A disservice. And naked in the garage? Just odd. Turn naked into a net positive with butt-naked underwear and feel like wearing nothing at all. Anywhere. Get butt-naked at your Duluth Trading Store. At Credit Union of Colorado, banking doesn't have to be like this. Big national banker here to let you know we are increasing fees again. Now, some people will say they are hidden fees, and if I had my choice, I'd hide them. But I guess that's not legal. So for now, please reference line 572 on page 36 for all new fees this month. At Credit Union of Colorado, we have better interest rates, seamless mobile banking, and no hidden fees. Ever. Credit Union of Colorado. Honestly, good. Learn more at honestlygood.org, federally insured by NCUA. Situation number 4. You want to pay for education. The cost of higher education rises every year, and few students can make it through college without going into debt. If you want to pay for a child's private school or college education, life insurance is a surefire way to make sure it can happen, even if you're not alive. Situation number 5. You intend to give equally. If you have multiple errors, leaving them assets instead of cash can get complicated. For instance, if two children inherit a house that's paid for, one might want to keep it as a vacation home, but the other might need to sell it because they can't afford the annual taxes and insurance. On the other hand, a life insurance payout is an easy way to make sure that you distribute cash directly to your heirs or to a charity in the proportion you specify. Situation number 6. You expect estate taxes and fees. If you have a large estate, there will be taxes, as well as legal and administrative fees that must be paid. Sometimes, heirs are forced to sell estate assets in order to afford these charges. You can use life insurance as an estate planning tool to fund your estate's liability and make sure your heirs receive exactly what you want. Situation number 7. You have a special needs child. If you have a child with special needs, you may need permanent life insurance. This is a type of coverage that ensures you no matter when you die, and it has a savings component in addition to a death benefit. If you already have life insurance, review your coverage at least every few years, or whenever you have a major change in income, expenses, or family status. To calculate the amount of coverage that's right for you, consider the following. How much income your survivors would need each year times the number of years they'd need it. What expenses your survivors would have to pay, such as funeral costs or outstanding debt. And the assets you already own, such as bank accounts and retirement savings that could be used to cover expenses. You can compare life insurance rates from top insurers by shopping online. I'll put links to a life insurance calculator and several of the best places to get affordable quotes in the show notes for this episode on the Money Girl page at quickanddirtytips.com. Remember that life insurance isn't a luxury. It's a necessity that's truly affordable for the vast majority of consumers who need it. I'm glad you're listening to change. That's all for now. Courtesy of Money Girl, your guide to a richer life. [Music] One, two, three, four. Those are numbers, but you already knew that. 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