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It’s Time For You To Get A Life… Insurance.

by J. Money on Wednesday, August 22, 2012

life insurance mascot

(bah dum-ching)

Seriously though, you better have some life insurance ;) Or what I’m gonna call from this point forward, MMLP. “Mo’ Money, Less Problems” Insurance! You die, and your entire family gets hooked up – what what!

If you didn’t already know, today is official Life Insurance Day per my good friend Jeff Rose, where a whole mess of bloggers are putting out the good word.  With some being way more detailed in their posts than others (I’ll be in those “others” fyi cuz I don’t know a ton on the subject, and the whole thing honestly bores me to death. No pun intended).

The fact of the matter, though, is that MMLP is super important – especially if you have any loving husbands or wives or a plethora of running kids all around your house. The last thing you want to do is put them into more hurt *financially* after they lost their favorite person in the world!  Make sure to give them financial peace of mind so they can live a long and stress-free life when you’re gone – it’s the best thing you can leave them! (Outside of love and fond memories, of course)

Here are 4 reasons why life insurance MMLP is important:

  1. When you die, it’s going to cost money. Who, will depend on you.
  2. It’s good to give your family complete peace of mind.
  3. It’s good to give YOU complete peace of mind while you’re still alive! ;)
  4. And more importantly, you can forever ward off any more questions from your mom or dad (or pf blogger?) on why you’re not acting like an adult and getting insurance ;) Nice, huh?

The fact is, when you die your entire family is going to be crushed and the last thing on their mind will be money.  But when it all sinks in and they’re thinking clearer, you leaving them with hundreds of thousands of dollars is going to make it a teensie bit better for them later – believe me.  Imagine your entire household being 100% debt-free? No mortgages or loans or anything? Or that your kids had their college tuition all set up? Shoooooot… Money can’t bring you back or kiss your family on the forehead every night, but it sure can improve their lives forever and ever, no doubt about it.

So the question you should REALLY be thinking about right now, is *how much* you need to be feeling that good. And unfortunately that’ll be up to you and your comfort levels as no pro can tell you a magic number (although they’ll always try). Personally, we came up with our own numbers by asking ourselves what our goals were. And now that I look back at this post, I realize it’s already been 4 years and we need to update it! Yikes… I guess today is for both me AND you, haha…

Our goals with MMLP were as follows:

  1. We wanted to be completely debt free in the event any of us went bye bye.
  2. We wanted to “set it and forget it” so we didn’t have to think about death every day…
  3. And now we want to make sure Baby $ is all set for future and other crazy expenses that can come up over his lifetime in the event we’re gone.

After talking with a lot of people back then, we also decided that TERM Life Insurance was the best bet for us youngins’ too.  And naturally we went with USAA ‘cuz they’re the vault for all our financial products in life ;) Here’s a quick summary on Term from Wikipedia:

Term life insurance… is life insurance which provides coverage at a fixed rate of payments for a limited period of time, the relevant term… If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time.

So basically you pay a set amount of money for coverage over a certain amount of time, and when/if you die it pays out X amount to the person you linked it to. Nice and simple. This is how it currently breaks down for us (again, we need to call and adjust this):

  1. My MMLP plan: $30.99 a month, which pays out $350,000 if I die within 30 years.
  2. The Mrs’ plan: $24.57 a month, which pays out $350,000 if she dies within 30 years.

We came up with that $350k figure because it would have pretty much wiped out our entire mortgages at the time. And that was the main thing we wanted to have covered since it was (and still is) our #1 sore spot financially. Looking forward we now want to make sure we have enough to cover future funeral costs and college tuition for our kid(s) too – probably upping our new number to around $450k, or maybe even topping it off at a cool half million?  We’ll have to see how much more that costs a month though, and what are options are with updating our original agreements (maybe we need to pick up additional MMLP on top of the ones we have? I’m not too sure… it’s part of my homework)

Another question is figuring out who *DOESN’T* need life insurance at all? Or is there no one that falls under that category? I always think that everyone DOES need it, but time after time I also get convinced that maybe there are those who don’t ;) Like maybe people who are single and/or without any debt whatsoever? I don’t think there’s any 100% answers here, but I DO think it’s totally up to your own comfort levels. Some of us like being covered for everything out there, and others could care less. The only thing I’ll say is that *someone* will have to pay for your funeral at some point, and maybe other things?, so it may make sense to at least get a little.  It really doesn’t cost that much.

If it helps, here are a couple of resources that goes a lot more into detail. I’ll be reviewing ‘em too:

The point of all this though, is to GIVE LIFE INSURANCE SOME THOUGHT today. That’s all I ask of you. If you already have it, review your situation again and see if it’s still enough. If you don’t have it, ask yourself if it’s time to change? Maybe you got married? Maybe you had kids? Maybe you want a fancy funeral with all kinds of parades and concerts in your honor? Or maybe you just want to leave some money to a special person in your life just for the hell of it?

Whatever the case may be – think about it for a hot second and then move on to your coffee and Facebook :)  It’ll probably be another four years until I blog about it again, so you don’t have to worry about me checking up on you, haha… just promise me you’ll think about it!

————–
PS: Also check out what everyone’s saying on Jeff’s Life Insurance Movement page! He’ll be rounding up everything and sharing his own views on this stuff too.  And he’s a Financial Planner, so he’s a lot smarter on MMLP than I am – might be worth a read ;) Hope this helps!

(Photo by Storyman2008. Awesome words by J$)


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{ 27 comments… read them below or add one }

1 Lance @ Money Life and More August 22, 2012 at 7:09 am

I agree that most people need life insurance and it is a great thing to bring up to talk about because most people don’t think about it. However, for myself, I personally don’t feel I need it at this point in my life. Yes, I will need it in a few years when I have a kid but until then everything will be fine without it. I’m sure my girlfriend wouldn’t mind getting a few hundred thousand if I die but she could live a perfectly fine life without it. Check out my post today over at my site if you want more details.

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2 MMLP Junkie August 22, 2012 at 7:27 am

Great post my man. I’m 28, and most people my age aren’t even thinking about life insurance letting alone making crazy sexy budgets.

My wife and I each have 30 year term plans at a cool $1mil each (which is $100/month/person). May be overreaching a bit, but we got a return of premium plan, where when the term is over or if we ever cancel the policy, we’ll get all the money we put into the plan back (unless we cancel within the first five years – those clever insurance companies :-) ). At the end of the 30 year term, we can either take the money back (which would be $35k a piece, or $70k total), or we can let the insurance company keep it for a permanent $100,000 policy for each of us (200k total) until we die, and our kids will just get it. Legacy!

I figured that 1Mil would cover the cost of the house, and raising 1-2 kids including college. As we get older, we’ll obviously downgrade that a bit.

Anyways, just hitting you up to share in the MMLP love!

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3 Greg@ClubThrifty August 22, 2012 at 7:44 am

Love me some MMPL! As a mortician, I see people every day who wish their loved one had purchased life insurance. If you don’t have it, go get it. It is cheap and your family will thank you for it.

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4 jim August 22, 2012 at 7:55 am

Jay, did you consider just saving more money instead of buying insurance that you are very likely to outlive? I know at 5-8% that would only put you somewhere between 40,000 and 80,000 saved but at least thats money you can count on… I imagine by the time you hit your 60′s the term insurance will cost ~$200 per month for similar coverage.

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5 Renee S August 22, 2012 at 8:17 am

J,

I want to ask the same question as Jim….I am looking into buying life insurance for myself. I am 24, no kids and not married. I was looking at some websites and it says I should get “whole” life insurance? What do you think about that? Why did you choose to get only the 30 year life insurance? Thanks for your reponse!

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6 Em August 22, 2012 at 8:35 am

One of my August goals is to get life insurance for myself and my husband. So far, apparently no one wants my money because none of them have followed up on our inquiries. You’d think they’d love to take 2 healthy young adults’ money for the next 30 years

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7 Brian August 22, 2012 at 9:05 am

@Renee S

Most people will tell you to stay away from “whole” and “universal” life insurance since it is more costly than term. Basically it is a way to mix an investment vehicle with an insurance vehicle. Most people will tell you, you should not do this and you should invest on your own and let the insurance company only insure you. Personally I wouldn’t get whole or universal or any of those other exotic forms of insurance and just get straight boring term coverage.

We are currently shopping around for a term policy for myself and my old lady. Since we own the house outright it is making the total amount of coverage we want to be a bit of a question. In the end we will probably got with a $500K policy so the little guy and the surviving spouse won’t have to worry about much.

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8 Gillian @ Money After Graduation August 22, 2012 at 9:33 am

Great header picture :P And pretty good rates for the insurance !

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9 Walnut August 22, 2012 at 9:50 am

I have a small employer life insurance policy and a disability policy that will pay out 75% of my current salary if I’m disabled. I’m currently single with a mortgage and car loan. I have zero incentive to get life insurance as I have enough equity in my house to easily cover the loan when it is sold. My 401k and other investment vehicles will pay off the car loan without any issue. Any leftover cash and the small work life insurance will pass over to my parents to settle the final estate/funeral costs/etc.

I’m not sure I’ll ever devote much thought to life insurance until I have a couple kids. I’d rather “self-insure” by making sure my assets cover my debts with a significant cushion left over.

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10 Joe @ Retire By 40 August 22, 2012 at 10:39 am

I don’t have life insurance right now because I just left my job. I’m planning to get one ASAP. I don’t like paying $30/month, but it’s necessary.

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11 Krista August 22, 2012 at 11:53 am

Thank you for posting this today. I spoke to someone waaaay back in February about getting life insurance now that I have a kidlet, but they asked me a whole bunch of questioins and wanted me to provide numbers and quite frankly I just let it slide because it overwhelmed me. But in reading this post today, it’s inspired me to tackle this issue again so I don’t have to worry about it anymore! Thanks!

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12 Stephanie August 22, 2012 at 1:14 pm

My husband and I have both had life insurance policies for about 2 years now. We knew we wanted to get them while we were still young and healthy (we were both 27 at the time), because it allowed us each to get a nice discount on the standard rates. for about $15/month (me) and about $19/month (him) we each have a $250,000 policy. We didn’t want to go overboard on the coverage, because we do keep our cost of living pretty low and don’t have much debt. But we knew we wanted kids soon-ish (and now we are expecting our first in Feb. 2013!), and we wanted to make sure we had enough to make sure the surviving spouse would be able to afford childcare expenses that would go along with being a single parent. But let’s just hope neither of us ends up in that situation! ;-)

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13 Jenna, Adaptu Community Manager August 22, 2012 at 1:23 pm

I think I’d step up my life insurance plan if/when I get married / have kids. Definitely something to consider during those big life events.

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14 Nick August 22, 2012 at 1:29 pm

Great stuff J$. It’s amazing how many people could buy a $500,000 term life policy with just the money they save clippping coupons in a week, but still don’t buy it. I got a quote yesterday $21 for a 20-year term policy for $500,000 for me. It “so silly cheap” that there really is no excuse to leave people stranded if you die young, if you ask me. You can see it get pretty worked up about this… sometimes a little too worked up (my submission to the movement got a little angry…). But back to the point: you’re a good man for making sure all of the “money” family is taken care of if “Money Mama” or “Daddy Dollars” dies too soon.

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15 StackingCash August 22, 2012 at 2:06 pm

One of the things I hate about life insurance is that inflation eats away at the value. 350k will not be worth much in 20 or 30 years from now. I think a 20 year term would be sufficient. At the rate you guys are going, I think in about 20 years you will be able to “self insure” yourselves :)

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16 Craig Arthur August 22, 2012 at 2:56 pm

I always tell my wife that she would be a rich woman if I were to die…I would be semi-wealthy. HAHA

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17 Debt Free Teen August 22, 2012 at 2:56 pm

One of my good friends dads was just diagnosed with lung cancer. He is 47 and has a year to live and he never even smoked cigarettes. I’m learning about the importance of life insurance!
Chase

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18 m1nts August 22, 2012 at 3:26 pm

I’m surprised your mortgage didn’t come with a life insurance, or does it only happen in my country?
I have a life insurance but it’s a benefit from the company where I work, I think I may get one aside *-)

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19 Ornella @ Moneylicious August 22, 2012 at 7:00 pm

Like any financial product it depends on your circumstances. Some people are best suited with Term, others with Whole Life, other with Universal Life, others with Equity Index Universal Life or Variable Universal Life. Personally, I have no dependents and in my early twenties I got a Variable Universal Life. For me I used it as part of my long-term strategy because it doubles as life insurance (plus it’s less expensive the younger you get) and to supplement as my retirement income ( I have other investments accounts, too). Actually, my cost has declined the older I got.

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20 J. Money August 22, 2012 at 7:22 pm

***I forgot to mention in the article that it’s also a great idea to do earlier while you’re nice and healthy too!***

You never know what will happen in 10 years or even in one (or tomorrow!), so if you get that clean bill of health early on (they check you all out before granting you the insurance) and lock it in for 20-30 years, then you’d be set just in case… Something else to consider anyways.

@Lance @ Money Life and More – I think a lot of people feel the same way as you do too. But check what I just wrote here above ;)
@MMLP Junkie – Yeah dog! I like that!! And $100 isn’t TOO bad for what you’d be getting either. I could get down with that :) MMLP for life!
@Greg@ClubThrifty – What??? You’re a mortician? AWESOME!! I didn’t know that :) Want to do a guest post for me on the inside scoop of being one for a living? That would be so inteersting! Shoot me an email if you’re interested, I’d love it: j (at) budgetsaresexy (dot) com.
@jim – Nah, I never even considered that to be honest with you, but it’s a neat way to think of things. I don’t think I’d like it though cuz if something happened tomorrow I’d have diddly squat ;) The whole point of it for us is peace of mind and making sure 100% we’d be fine, so if we only had X amt saved at any point it would still stress us out… But for those who don’t believe or want life insurance? Damn good idea!
@Renee S – I pretty much agree with what Brian said down there :) I don’t mess with anything fancy or investment-related, and just want something nice and simple: If we die in X years we get X number of dollars. That’s how it *should* be in my opinion, but certainly do your research and see what you’re most comfortable with. I think a lot of older people say to do “whole” and the younger generation prefers “term.” Who knows what the next generation will say :)
@Em – Haha… well stay on it! It’ a good thing to have :)
@Brian – Great answer bro, I couldn’t agree more.
@Gillian @ Money After Graduation – I’m glad you liked it :) Took me a while to find something clever, and I was pretty happy with it in the end!
@Walnut – Seems like a fine plan to me :) I forgot you can get life insurance through your employer sometimes, good reminder. And the same with disability too – I actually need to look into that too! It really freaks me out.
@Joe @ Retire By 40 – I know, these are the things that suck even more when you retire and/or start working for yourself. All of a sudden you pay a lot more attention to all the numbers ;)
@Krista – Good! The whole thing IS kinda overwhelming at first, but once you get going and just decide one way or the other as far as what kind you want/etc, it’s just a matter of filling out paperwork and taking the next steps ahead to knock it all out. Any good company should make it easy on you so they can snag your bizness. So if they aren’t, move on to the next! Or if you have any military connections in your family, see if you can get USAA! That’s what they’re best known for – insurance.
@Stephanie – GOOD!! Way to go!!! And oh my gosh CONGRATS ON THE BABY!!! You’re gonna love it :) Nothing better in the world, it’s crazy.
@Jenna, Adaptu Community Manager – I hope you do :)
@Nick – Haha, I don’ blame you – it IS silly money! Esp. since 95% of us can REALLY afford it even though they think they can’t. $20 a month is literally 4 coffees or one dinner out a month – super do-able.
@StackingCash – Well, that would certainly be ideal, yes :) But $350k any number of years from now is still $350k that I wouldn’t turn down. Your mortgage will still be the same too, you know? Whether it’s 5 years or 15 years for now, mortgages that are fixed ain’t goin’ up, baby ;)
@Craig Arthur – Haha… another way to look at it ;)
@Debt Free Teen – Holy shit, I’m sorry to hear that. Damn… that is just insane. How sucky that on the other side of that chain smokers can go 50+ years and be perfectly healthy in the end? Life is so strange sometimes, I hope your friend’s family is coping with things okay – I can’t even imagine the paid I’d be in :(
@m1nts – You know, I think we DO have that option here too actually, it’s just not that popular I don’t think… I have Chase as my main mortgage and every now and then they try to upsell me on some kind of life insurance, but I just neve read it thoroughly and throw it in the trash ;) For some reason that stuff seems too shady to me. I feel like they should concentrate on what they’re good at, and leave insurance to the others. But maybe I’m wrong here.
@Ornella @ Moneylicious – Also you’re a professional and you know what you’re doing wayyyyy more than the average person ;) I agree other types of policies could be good for people, but only if they do their research and understand entirely what they’re getting themselves into.

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21 AverageJoe August 22, 2012 at 7:45 pm

You just can’t beat USAA if you’re eligible. Great job picking your carrier!

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22 LB August 22, 2012 at 9:04 pm

I totally have to go against everyone on this one. I am always the black sheep, because I guess I just don’t think like other people (Totally got me in trouble at work more than once!)

OK I am not saying DON’T get life insurance, but for me I am not. I am totally angry at USAA still and don’t have a mortgage or kids or even car payments. If I died, my husband wouldn’t have to help pay for school so no problem there. If he died, I would just sell my house and all would be fine. Maybe if I finished school, or had kids or something else, but for now, no thanks.

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23 m1nts August 23, 2012 at 9:50 am

Here we don’t have any option, it comes with the mortgage and that’s it, but of course I live in a country where as long as you have a paid job the government takes money from your paycheck and puts it on a retirement account, public health services and a saving account exclusively for housing (they modified this already, not too long ago if you didn’t use this money you couldn’t ask for it once you hit the *mandatory* retirement age, now you can get 100% back interest included)

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24 J. Money August 23, 2012 at 10:14 am

@AverageJoe – You know it!
@LB – The important part though is that you’ve given it some thought and THEN made a decision. So I still got your back – even though I don’t agree all the way ;)
@m1nts – Woah that’s pretty cool though! What country are you in? I forget :(

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25 Jennifer Lissette August 24, 2012 at 12:14 pm

Funny enough, my husband has an appointment for his blood test for term life insurance today. I believe the term is 30 years, for $1.5 million, for $40/month. I still need to get some life insurance, too, but we haven’t figured out how much he needs on me. I’m a stay-at-home mom, so no salary. But he will need to cover the costs of housekeeper, personal chef, all-day childcare and a financial planner (and maybe a personal escort, lol) until the kids are grown. It’s a pain in the butt to figure out.

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26 J. Money August 24, 2012 at 5:14 pm

Haha… well $1.5 Mil sounds like a safe number :) And $40 bucks is a STEAL! Esp at 30 years, wow. What’s mine, less than half that and like 1/4 the pay out! Give him a fist bump for me, okay?

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27 Hadley September 20, 2012 at 3:02 pm

I think life insurance is essential for those who need it, but not everyone is in need of life insurance, unless you have someone who relies on you for financial support, like a spouse, children, parents, siblings, a relative, etc. How to save on life insurance? Buy life insurance when you are young and healthy, consider term life, stop smoking, get healthy, compare rates among several leading insurers, choosing annual payment option, and don;t buy more than you can afford.

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