Paycheck Insurance

         Okay, so you are paying off your debt or maybe you’re done. This next step doesn’t apply to everyone and it’s not a fun one to think about, but it’s critical if you have people that depend on you. Most of us either have a spouse, children or others that are counting on us to be a provider. It’s likely that you have insurance on your home, car, and sometimes people will even purchase that 2-year plan of additional coverage for a new cell phone. That’s great to have, but how about your paycheck? If you crash your car, replace it. House burns down, replace it, but if you are gone… so is the income that your family needs and depends on. We need to have life insurance to protect those that we care about most. It doesn’t change the difficulty in losing a loved one for them, but it means that even though we are gone we can still provide as if we’re still around.
          Life insurance is as simple as it sounds. It is an insurance policy that pays out a benefit in the event that the policyholder has passed away. There are several types of life insurance including term, whole, and universal. Below I will explain each one, and provide my recommendation.

Whole Life

This is a “permanent” life insurance policy that offers protection for life with no expiration. Because whole life has no expiration, the payout is guaranteed to the beneficiary of the Policy Holder. Whole life also builds cash value that can be borrowed against, as long as all Premiums are paid on time. Premiums are typically the same amount for the duration of the policy. This is an expensive option because each policy pays its Benefit amount, and has the “cash value” option.

Universal Life

Universal operates very similarly to whole life as a “permanent” life insurance option. This policy also builds cash value, the payout is guaranteed, and has no expiration. The main difference is that universal life offers flexibility in premiums, and coverage as the policyholder's circumstances change.

Term Life (Recommended)

This policy type is typically the most affordable, and simplest to understand. Term life insurance works by selecting a preset amount of coverage time (term). These are often offered in 10, 20, and 30-year terms and the policy terminates at maturity. The premiums are affordable because these are designed to protect an unexpected early death.

          Everyone's circumstances are different so choose the policy that best fits your individual needs. My recommendation for most of us is a lower cost term life policy. The reason I suggest term life is because we are on a better financial path, making good decisions that position us to save money. We are not going to carry debt, we will have money in savings, and investments that will build as the years go by. Our children will grow and eventually have jobs of their own, and their own income. So I don’t think that we need to pay an expensive premium until we are 80 years old. Depending on your situation, get a term policy that will cover things for 20, 30 years. The premium will be affordable, and if you die after the policy expires you will have enough money in savings and retirement by that point to help your loved ones. This is more than a policy for a car or boat, so make sure you have the most important insurance policy you will ever buy, Life insurance.