About a couple weeks ago while I was starting my new path to financial independence, I wanted to protect that independence with term life insurance. To properly protect one’s family from catastrophic financial burdens one must have life insurance! There is no getting around that fact! So I looked into several insurance companies online and through my bank. I ended up getting a reputable financial planner (good friend of mine) to come down to my home and explain the differences of the life insurances you see on T.V. On my own I already have heard and read about term life insurances. I was listening to Dave Ramsey on the radio and watching Suzie Orman on YouTube. So I basically learned that Term was the best option but never fully understood why besides the fact it was cheaper and only covers for a set time (20 year term lasts 20 years). So long story short I ended up buying term life and was happy that the wife and I was covered if anything should happen for the next 35 years. Problem was that I felt I should not get the children life insurance because of what I already have learned and researched.
Here is what I was offered:
Option 1 600k me and wife 400k with children rider of 25k
Option 2 300k me and wife 200k with children rider of 25k
Option 3 200k me and wife 200k with children rider of 25k
All the options was for 35 year level term and the children up till 25 years old with an option of multiplying in value 5x to 125K for each child. So on hindsight what option, based on my income, should I have gotten? Well the experts say one needs to have 8x to 10x their annual income so that the insurance will replace the income of the family member who is deceased. I ended up getting option 3 because I’m still trying to pay off one more credit card. Option 3 was about 94 bucks a month with a 10k children rider. If I had gotten option 1 then payments would be about 50 bucks more a month and my goal of paying off my credit card in 3 months would be delayed.
If I did it right I should not have gotten the children any insurance and just covered the wife and I. I could have, for the same price, got option 2 or stuck with option 3 at a lower price and all the extra money go towards my credit card. I am able to change my plan within 6 months without getting another medical exam and with the credit cards paid off I will be getting option 1. I just felt guilty not getting the kids life insurance when I was getting the wife and I some. Plus my buddy kept saying that their life insurance will be multiplied 5x when they get older. I will be canceling the child rider next time I get a chance.
Below are links to why children should not be insured.
Here's Why Your Child Probably Doesn't Need Life Insurance
My wife did have Gerber life when my first child was born but it defiantly was not worth the cost for coverage. The child rider on my current term life was a better option if I was forced to choose.
No comments:
Post a Comment