We jump at any and all possibilities to talk about life insurance making understanding this important product a lot less hard. Recently, our Head of Underwriting Solutions Laura McKiernan Boylan was interviewed by leading lifestyle blog Cup of Jo for a quick question-and-answer session on our favorite subject – life insurance. Cup of Jo also is actually Laura’s favorite blog.
Joanna Goddard asked Laura questions that were crowdsourced from her readers as well as members of her team. Many of our customers and prospective customers have asked the questions, so below we are reposting these excellent inquiries from the Cup of Jo community as well as Laura’s answers.
How much life insurance will i really need?
What's the difference between term and whole life insurance? Which must i get?
Whole life insurance is exactly what it sounds like – coverage for your entire life. It's generally much more expensive than term policies due to the coverage timeline and since it has a cash value component that can grow with time. This will make sense for people in certain scenarios, like for those who have a child with special needs and also you want to make sure they will always be covered, or you possess a desire for both insurance coverage along with a product which can be a part of your long-term financial planning strategy.
As an example of the cost difference, a proper 35-year-old-woman can purchase term life insurance, for any 30-year term, for $500,000 of coverage, for $36/month. Which will cover her until she's 65. The same quantity of coverage under a very existence policy would cost $400 to $500/month. If you are thinking about how much a term life insurance coverage would be for you, Haven Life has a quote tool that provides a quick estimate. You can learn more concerning the pros and cons of term versus whole life on our blog, too.
I have life insurance coverage through my employer – aren't I adequately covered?
Should I bother with life insurance basically do not have kids?
Life insurance really becomes necessary when you have individuals who depend on your income in some manner. For example, if you are single and also have a mortgage and want your folks to have that house as an asset should you die. If you have someone who depends on you financially, for those who have a home loan, if you have kids, for those who have co-signed debt – then it is time to consider buying life insurance coverage.
Here's another thing to think about: Without having kids but they're planning on having them, you may want to get life insurance coverage in place beforehand. The younger and healthier you're, the cheaper it's. Plus, there are several scenarios, like gestational diabetes while you are pregnant, that can make it more expensive post birth.
As always, if you're not sure if life insurance coverage fits your needs or if you need it, use an online calculator. Ours will explain if you do not need coverage at all.
My partner works but I stay at home with our daughter. Should we just get life insurance coverage for him right now?
What is the process like when trying to get life insurance? I've heard horror stories about how exactly long it requires.
When I applied for a policy through Haven Life, with coverage from our parent company MassMutual, I applied on the internet and had to talk to just one human (the phlebotomist), and I got my final offer in just 18 days. If your medical exam is needed for your Haven Term policy, you are able to go at any given time and put of your choosing. Most customers decide to have it at home – I personally chose to take the medical exam at a Quest facility down the street from your office. It took about Fifteen minutes from start to finish.
When someone applies for a lifetime insurance, how do you assess risk? What types of things are you looking at?
In the application process, some insurance company will ask about personal and family health history, occupation, financial risks, lifestyle choices and hobbies (dangerous hobbies like skydiving or rock climbing, for instance, can make the premium higher) to know how to price your coverage.
How will i prioritize all the policies/savings/debt I ought to be putting money toward?
Once you possess an adequate cushion, you are able to focus on three financial priorities: paying off high-interest debt (like credit cards), saving for retirement, and continuing to construct your emergency fund.
When it comes to debt, consider beginning with the credit card using the highest rate of interest first since you'll ultimately pay the most on that balance (but be sure to spend the money for minimum on all your cards!). Generally student education loans are a lower rate of interest and from the prioritization standpoint, come after credit debt.
If you have a 401(k) for retirement funds, you should try to contribute at least enough to obtain your full employer match (it's free money!). If you're a freelancer, open a traditional or Roth IRA, which also have tax advantages, and begin with small auto transfers. Over time, you are able to increase your contributions slowly and gradually.
It can be challenging to balance savings and debt repayment at the same time, but it's vital that you keep accumulating that emergency fund. For instance, 3 to 6 times your monthly income once we mentioned earlier, or more if you're a freelancer or person in the gig economy.
As you're building your financial foundation, it can still be good to have a little bit of insurance coverage (particularly if you have financial dependents; if you do not, skip it!) – say one to three times your annual income. When you're young and healthy, a little term policy like that can be very affordable, and it will help give a financial cushion to your beneficiaries if something happens for you.
Then, as you get financially stable, you can start considering other goals like saving to purchase a house or adding to your child's college education fund, and, obviously, should you need life insurance to safeguard those assets or intended plans.