If you don’t know how to approach life insurance, you’re not alone. It’s a scary, grown-up term… which is funny to say since I’m a 31-year-old finance educator and investor.
Don’t worry, I often look around for the more ‘adult adults’ to explain things to me — or I consult the ultimate adult, Google.
Luckily for you, I’ve done the research so you don’t have to panic. Calm those heart palpitations, y’all.
While life insurance isn’t the most fun thing to consider, it’s responsible to educate yourself about what it is, why it’s important, and what the best plan is for you and your beneficiaries.
Why is life insurance so important?
I know this is not a fun topic or one that’s comfortable, but it is a topic that is important. Grief is one of the hardest things that we have to go through in life. Unfortunately, as humans, it’s something we must all face.
Having to deal with financial hardships on top of grief is even worse. Losing a spouse and their income on top of having to pay your mortgage or worry about your kid’s college is the last thing you want on your mind.
Having term life insurance helps to take the financial stress out of the equation.
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What is term life insurance?
Term life insurance, simply put, is life insurance that gives an allotted monetary payout the covered person, dies during the term of your coverage, your beneficiary is eligible for a death benefit.
If the term expires and you’re still kickin’, you have the option to renew for another term or convert your life insurance policy to a different plan.
Term life insurance is known as pure life insurance
What is whole life insurance?
Whole life insurance gives you coverage for the entirety of your life if you continue to pay premiums. Your beneficiary gets a death benefit as well as a cash value option, where cash has the opportunity to compound.
Whole life insurance is also referred to as permanent or traditional life insurance.
Term life insurance is appealing because it is cheaper; however, whole life insurance has a cash value built into its plan.
Remember that a life insurance policy is not an investment. It’s a security blanket and should be treated as such.
What is the difference between the two?
When it comes down to it, the difference between whole life insurance and term life insurance is the time period of the policy.
Term life insurance lasts for a set period of time, where whole life insurance ends when you pass away. Another very important differentiation is the cash value component that is associated with whole life insurance.
Why is term life insurance different?
Term life insurance plans are more affordable than whole life insurance plans.
As stated previously, term life insurance policies do not have a cash value associated with them.
Term life insurance provides coverage only if the insured dies during the duration of your plan.
How Much Term Life Insurance Do I Need?
Common advice is to get a life insurance policy for 10-12 times your annual income. This is so that your income is replaced if you die.
It’s also important to note that you might need to take out two term life insurance policies for both partners. No matter what your situation– full-time work, stay at home parent, self-employed — you may need to make up lost income or you will need to pay for domestic services that typically go unpaid.
Want to help protect your family no matter what happens? Get a quote in under 5 minutes to make sure you have what you need.
How much is term life insurance typically?
A term life insurance policy might be the right policy for you. A healthy 30-year-old male can expect to pay an average cost of $26 a month for a 20-year policy with a $500,000 coverage amount.
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At what age should I get term life insurance?
If you have another human depending on the money you bring in each month, you need term life insurance.
How does Ladder avoid requiring a medical exam?
Through questions about lifestyle and health, identity verification, and pulling available data about the individual applying such as prescription and credit history, driving records, and prior attempts at insurance, Ladder can underwrite policies as effectively as with a medical exam for coverage up to $3 million. For coverage above $3 million, a medical exam is required.
Can I trust online insurance companies?
Ladder is the online life insurance agency that I use. Ladder has been backed by industry organizations and leaders and offers policies through highly rated carriers.
“Ladder underwrites the policies they offer in-house. Their data and technology allows them to help their customers.”
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