When my husband and I got married, I immediately called our insurance agent and asked if we would buy life insurance.
He asked if we had a house. I said no. He asked if we had children. I said no.
He advised me to hold on until we had either.
Last year we finally bought a house so I decided it was time to finally get life insurance. The process taught me a lot about an aspect of personal finance that I had never personally dealt with before.
Here's what I learned about choosing a life insurance policy – and what surprised me.
The differences between term and whole life insurance
Before I signed up for life insurance, I knew that I would have to choose between a term and a whole life insurance. The whole life insurance is meant to be throughout your life. Term coverage covers only a particular term, usually from 10 to 30 years.
The price difference between term and life insurance is dizzying. Because a whole life policy covers your entire life, it is much more expensive than a running policy.
It didn't make sense for us to get the whole life insurance policies. We only need coverage for years to retire. After that, we will be self-insured and will not have any major expenses to pay.
Why the term applies
Before my husband signed up for life insurance, we discussed whether he would sign up for a 20 or 30-year term. We asked my financial planner, who said that 20 years should be good for us. The planner said that our mortgage loan will be much less in 20 years and our pension savings will be higher, so the need for life insurance will be less.
But my husband and I just bought a house last year with a 30-year loan. We will probably not stay at home for 30 years and will probably sign up for a new loan in a decade or so.
I hated the idea of having a life insurance that would not be as long as our greatest responsibility, so my husband chose a 30-year term. The premium difference for us between a 20-year policy and a 30-year policy was about $ 10 a month, which corresponds to SEK 3,600 over the entire policy. It is a small price to pay for an extra decade of peace of mind. We also decided to go with maturity insurance instead of mortgage loan insurance.
Remember that life insurance is not just about what makes mathematical sense. It is also about what makes me less anxious about my future.
Decide how much you need
The decision to get life insurance was easy. My husband and I had just bought a house and I knew it was time to help protect our future.
But how much life insurance to buy was a bigger issue. Unlike other personal problems, there are no set guidelines to follow. Again, I asked my financial planner who recommended the following calculation:
- Burial Cost: Up to $ 10,000
- How Much Debt Do We Have: $ 170,000 in the Balance Sheet of our Mortgage
- How Many Years of Income Exchange: I Selected Four year
Choosing a life insurance policy is to determine how many trips to the buffet line you want your money worth. I wanted enough coverage to feel safe if something happened, but not so much that I would waste my premium.
The amount I picked up would let me live without debt and have a decent pillow to get back my feet. It will not let me retire completely from work, but it will also not force me to go back to work before I am emotionally ready.
We discussed that we bought a larger policy, enough for me to theoretically be able to retire. But it would almost double my monthly premium and since the odds are high that nothing will happen, I didn't want to make a big contribution for something I don't expect to happen.
You can help Haven Life Insurance Calculator help you figure out your life insurance needs.
Find the right company
When you decide on life insurance companies, the biggest thing you are looking for is not how much the premium costs, but how economical the solvent is.
Not all life insurance companies are built in the same way. My husband bought a Haven Term policy, issued by MassMutual, through Haven Life. I remember to check out MassMutual's ratings from A.M. Best, an objective party that analyzes how creditworthy a company is.
Some people overlook this part of choosing a life insurance, but that is the most important detail.
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Think about your health
When you sign up for life insurance, the company asks you to rate your current health. This is when I got excited. Right now my husband is in excellent health. His weight, blood pressure and cholesterol are great. Because his health is so good we could get an excellent speed.
My health is another story. I have been diagnosed with a BRCA1 mutation, which means that I have an increased risk of breast and ovarian cancer. I have preventive surgery soon to remove my breasts, ovaries and fallopian tubes, which reduces the risk. I'm still planning to get coverage, but will wait until I've recovered from surgery.
Overall, buying life insurance was easier than I thought. My husband had to answer questions about his health, but he didn't have to go through a medical examination, and the prices were in line with our budget.
[One-CommentQuarterlyVocals:CandidateCandidateQualificationProgression InstantTerm process in which some applicants aged 18-59 seeking a $ 1 million death penalty may be able to complete the coverage without a medical examination based on the information provided during the application. Customers are notified when an app has been sent if they qualify to skip the exam. Keep in mind that it is always very important to be honest in the application. The issuance of policy or payment of benefits may depend on the responses in the application and their truthfulness.]
Getting life insurance was like registering for our home security system. I still don't want to break in, but now I can rest a little easier because I know we are protected.
Zina Kumok is a freelance writer specializing in personal finance. A trained journalist, she covered everything from attempted murder to the Final Four. She also writes a blog about paying her student loans for three years at Conscious Coins. This article is sponsored by the Haven Life Insurance Agency. Opinions are her own.
Financial strength of Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and its subsidiary, C.M. Life Insurance Co. and MML Bay State Life Insurance Co. (Enfield, CT 06082) is: A.M. Best Companies: A ++ (Superior; Top Category of 15); Fitch Ratings: AA + (Very strong, second category 21); Moody's Investors Service: Aa2 (Excellent; third category of 21); Standard & Poor's: AA + (Very strong, second category 21). Rate is from May 1, 2019 and may change. These values do not apply to the Haven Life Insurance Agency, LLC.
Haven Term is a Term Life Insurance Policy (ICC17DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through the Haven Life Insurance Agency, LLC. The policy and rider's form numbers and features may vary by state and may not be available in all states. In New York, Haven Term DTC-NY is 1017. Our license number in California is OK71922 and in Arkansas, 100139527.