Life insurance: this is a topic I avoided for most of my professional career. I always liked to view myself as an “investment” guy. I would rather focus on equity, fixed income, asset allocation, macroeconomics, and how the world around us can affect your investments. However, when I became a father almost a year and a half ago life insurance was a topic I could not continue to ignore. My daughter depends on me for everything, financial support being one of them. It is not fun to think of my mortality at just 37 years of age, but my mother passed at 48 years old and my uncle passed at 32, both due to cancer related complications. Unfortunately, my family history is my reality and it would be irresponsible to not plan defensively, should a day come and I am unable to provide for Cadence.
The most common question I encounter regarding life insurance is determining how much insurance an individual needs, and what kind of insurance coverage they may require. There are a few simple starting points that I take into consideration.
How much are your earnings? How much does your spouse earn?
What are your current liabilities – mortgages, cars, credit cards, student loans etc.?
What are your future projected liabilities- children, college etc.?
The next issue is determining what type of life insurance coverage is needed. Do you need temporary, or more commonly referred to as term insurance? Term insurance covers you for a set number of years. Or is a permanent policy through whole or universal life more appropriate for you and your family? Permanent policies are typically for families with special needs children or possible estate planning needs.
Click Here for an explanation of different types of life insurance.
Planning for the cost of life insurance should not be a burden..There are extremely affordable policies on the marketplace, and we would be happy provide you with a number of different quotes and policy types.
Personally, life insurance is extremely unfun. But I promise you this, if for some unforeseen reason your spouse calls me with tragic news we will not be talking stock. We will be talking about how you did the right thing protecting your family.
I look forward to regularly sharing with you my views relating to personal finance. I would appreciate any feedback that you may have, and if you have a topic that you would like me to cover, please email me at [email protected] or find me on Facebook at Paul Hundley, Lighthouse Capital. Or read more of my blogs at the Lighthouse Capital blog.
Make it a healthy, happy, and profitable day.