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So if you want to get enough life insurance, how do you do it?
There are two ways to be insured -- through your employer or individually.
Most companies offer group life insurance, usually for twice your salary, for as long as you work there. But usually group life insurance is just a start, and not nearly enough to cover the people who depend on you. You almost surely need to supplement that coverage with individual policies.
There are two kinds of individual policies -- term and cash value. Term pays your beneficiaries a set amount if you die, but has no savings account attached to it. Term policies are much cheaper than cash value policies because of this.
To get the best deal on term insurance, shop around with one of the many insurance quote services where you submit your age, health condition and amount of insurance you need to receive a quote. One of my favorites is National Quick Quote at 1-888-326-1100.
The other kind of insurance is cash value, where you pay for insurance coverage and an additional savings plan where your money grows tax-deferred. There are several kinds of cash value coverage, including whole life, variable life and universal life. Some give you investment choices and others don't.
This is more expensive, but your money is growing for you tax-sheltered and if you don't die first you can use the savings in retirement or to borrow against for emergencies.
One question I am frequently asked is "How much Life Insurance do I need?"
The answer depends on your situation-the more people depending on your income, the more you need. So if you have a spouse working at home and small children, you need a lot more than if you are single and don't ever plan to have children. As a general rule of thumb, you need at least 7 times your annual income in insurance coverage.
The question to ask yourself is if I were to die today, how much capital would my spouse and children need to produce income to live off until they could become self-supporting?
The answer is usually a million dollars or more.
Is that how much you need? There is a form called The Survivor's Worksheet in my book, Everyone's Money Book, which will help you estimate your insurance needs more accurately for your specific situation.
To get more information on my book click
here.
For more information on buying life insurance you can contact:
American Council of Life Insurers
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
202-624-2599
www.acli.com
Jordan E. Goodman is America's Money
Answers Man. He is a regular contributor to Public Radio International's
The Marketplace Morning Report and appears frequently on NBC's The Today Show, PBS, MSNBC, CNN, CNBC, and Nightline. For 18 years, Mr. Goodman was on the editorial staff of Money magazine, where he served as Wall Street correspondent, in addition to his role as weekly financial analyst on NBC News at Sunrise for 9 years.
He is the author of Everyone's Money Book
(over 200,000 copies sold) with 6 special focus editions on College, Credit, Financial Planning, Real Estate, Retirement Planning and Stocks, Bonds and Mutual Funds and the co-author of Barron's Dictionary of Finance and Investment
Terms.
His website MoneyAnswers.com is full of resources, tips and strategies you can use to build a solid financial future.
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