Insurance
When buying life insurance, what important questions need to be answered?
When buying life insurance, what important questions need to be answered?
Does someone rely on you financially? This could be a child, a spouse, or maybe a mother or father who are reaching old age. If no one relies on you financially, you most likely DO NOT need life insurance!
If I need it, what type? Term is the answer. Stay far away from the expensive cash value life insurance policies like whole life and variable life. They lock up your money (so they can pay agents big fat commissions) and provide poor returns over time. Buy term if necessary at term4sale.com or accuquote.com. Those clearinghouses will scour the United States to get you the best policies from highly rated Insurance Companies.
If needed, how much? Start with 6 times your gross income ($50,000 paycheck would equal $300,000 in insurance). You might consider going higher, but first check on any free life insurance policies at work AND if you have kids in the home, go to socialsecurity.gov and print off your Social Security Statement. You will have survivor benefits available to you in the vast majority of cases. Those benefits could equal $500,000 or more in many cases.
Will it be taxed? No, in almost all cases, insurance proceeds will not be taxed. Make sure your loved ones know this fact so they can focus on other matters if that day comes.
What are your loved ones to do with that money? This requires a lengthy conversation at the dinner table as you discuss the matter in detail. It is imperative that you inform them on the matter so the decisions are sound financially. Take charge of the matter!