Suze Orman shares 4 life insurance tips during Life Insurance Awareness Month
Even though September is almost over, it’s not too late for us to recognize that September is Life Insurance Awareness Month. Life Insurance Awareness Month’s purpose is to inform consumers about the importance of life insurance. There is a lot of misinformation about life insurance. These tips are from Suze Orman, a financial expert.
Life insurance doesn’t have to cost a lot.
Low-income earners and those with low incomes are often misinformed to believe they don’t need life insurance. Orman states, “If you have a dependent person in your life, life insurance is necessary.”
Don’t let your money get in the way of what you have to offer your family. You’ll need a way to replace your $30,000 salary if your family is dependent on it.
Term life insurance is usually a better option.
Life insurance can be divided into whole and term. You are covered for a specific period of time with term life insurance. Whole life insurance covers you for the rest your life.
Your whole life insurance policy also accumulates cash value that you can access in various ways. There is no payout if you die before the term ends.
Whole life insurance may seem better at first glance. However, whole life insurance is often more expensive than term life insurance. This makes it difficult for many people to afford. This alone is reason enough to choose term life insurance.
It doesn’t mean you have to have 30 years of coverage.
Term life insurance policies can provide coverage for up to 30 years. You don’t have to buy a policy for that length of time.
Let’s say you decide to purchase life insurance at the age of 45. Your only child is now five years old. It may be that you want to cover your child until they are old enough. In this case, a 20 year policy may be sufficient. A 20-year policy could be sufficient if you have a spouse who is the same age as yourself. This would provide protection for your spouse until they turn 65, when they are eligible for Social Security benefits.
It’s not a good idea to buy too much life insurance
People may decide to forgo life insurance because it is too expensive. Orman says that you should not overextend your policy’s death benefit if your goal is to lower your expenses.
She says, “The smart way to determine how much life insurance you should purchase is to add up your dependents’ annual living expenses or your annual contribution and then buy a policy that is 25x that amount.” For example, if your dependents have $50,000 per year to cover their living expenses, then I ask you to purchase a $1.250,000 life insurance policy. This policy will include a $1.250,000 death benefit.
It is a crucial step in protecting your loved ones. You can learn more about life insurance to make your decision easier.
Additional Resource:
https://www.abl.com/personal-banking/bancassurance/
https://tpllife.com/
https://extension.missouri.edu/publications/gh3422