So What Do I Do?
Last
Wednesday I discussed in depth the types of insurances that should be
avoided. Two of which are life insurance
on a child and whole life or cash value insurance. What I did not discuss in that post is what
insurance you should get as an individual.
Term Life Insurance is the best option for individuals because it is has
a low monthly cost with high amounts in case of death ($500k, $1million). Depending on your needs you can get 10, 20,
30 year Term Life Insurance and depending on what you choose that is the time
the insurance will be in place. For
example you can sign up for a 30 year $1million Term Life Insurance
policy. Most people ask me what if I live
past 30 years what am I going to do then?
The point of the policy is to give you the cushion of insurance while
you get out of debt and save up enough inheritance that when you do die which
might be in 50+years your family will have enough money to bury you and still
have money left over to distribute as you see fit in your Will.
Another
concern that older individuals come to me with is that they think Term Life is
only for younger people and that they would not be able to afford it. I went on a popular insurance website quoted a 50yr old woman for a $500K
20yr policy in very good health for $85 in good health $93. Also I looked up a 70yr old woman $100K 10yr
policy in good health and it is $104 so it is doable. All that you need to do is the homework and
get the best possible Term Life Policy premium you can find. Another question that I get asked on this
type of insurance is how much should I insure myself for? I always tell them at least 10X your annual
income because this will allow your widow if you have one to invest the amount
as well as live off of it. Take me for
example I have a $500k 20 year term policy because that is enough money to pay
off our home, send both kids to college,
bury me, and still have more than enough to replace my annual income. Everyone will have different needs so only
you can make the decision on the policy needed.
If you are married each person needs to have a separate policy and a
Will in place to execute your wishes.
The other
insurance that you need to consider if you are 60 years old and up is Long Term
Care Insurance. What this insurance
guarantees is that you won’t go broke after a couple years in a nursing
home. There are nursing homes that cost
$40K+ a year and that price can definitely eat up a nest egg quickly. Where couples run into problems is that the
husband goes into the nursing home first uses up all the retirement savings and
when it is time for the wife to go in usually after the husband has passed away
there is no money left and she ends up in a Medicaid/Medicare nursing
home. If you have ever visited anyone in
this type of facility you know it is somewhere you don’t want to spend your
last years. With Long Term Care
Insurance you also have the opportunity to stay at your home for a short amount
of time and someone can come in for minor tasks such as taking vitals for your
physician, help with feeding, clothing, and bathing. Once your health deteriorates to a certain
point you will have to go to a nursing facility. Long Term Care Insurance is vital for anyone
over the age of 60 and should be purchased immediately.
After
reading both posts on types of insurance what will you be doing differently so
that your family is taken care of once you are gone?
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