This week in my Indy Star column I probably offended people, but in a lot of ways that’s my job. I offend people with the truth. This weeks offense? Life insurance. No excuses, you need it. A lot of it.
Like retirement, saving for college, and keeping a budget, life insurance is on the short list for necessary things. There is no way around this one. Life insurance is not only practical but it is an act of love.
“For most people, life insurance should be used to replace the disappearing income. Your lifestyle, your expenses and your goals are all based on your income. If you die, your income dies, and your survivors’ lifestyles, expenses and goals die. A death isn’t a blip on the screen that results in quick financial adjustments by the survivors. A death, when not supported by the proper amount of life insurance, rips people from their homes, routines and dreams.” (courtesy of the Indy Star)
If that isn’t convincing I don’t know what would be. No one likes to think about their own death, but it is the mature and responsible thing to do. My goal is get you thinking and acting in a way that will lead you to financial wellness. This is a big step. So I’ve got you on board, you need life insurance. The next big question you need to ask is how much life insurance do you need?
“Well, a lot more than you think, and a lot more than you want to buy. Despite the innate laziness of “rules of thumb,” they are often reasonable and appropriate. In the life insurance world, the rule of thumb is to have 10 times your income in life insurance coverage. For instance, if you make $50,000 per year, then you should have approximately $500,000 in life insurance.
This amount of life insurance would allow your survivors to re-create a vast majority of your net income, for quite some time, until they find a new normal. Without a doubt, the most important aspect of life insurance is having the right face amount. Unfortunately and fortunately, I’ve been there to pick up the financial pieces, several times, after the death of someone.” (courtesy of the Indy Star)
Now you know the why and the how of the practical piece, but what about love? Life insurance is love. Bold statement? Sure, but think about it. Life insurance assures that your survivors will be taken care of after your passing. That is love.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.