The Money Couple Minute - How Do We Talk About Life Insurance?
What happens to my family financially when I die? Many of us know someone who lost a parent at a young age or a spouse in the early-to-mid stages of marriage. What is the impact on those who are left behind? Will your spouse be able to stay in dream home you purchased together? Will he or she be able to give time to your children or will work be the primary focus to keep a roof over their heads? Will the lives of your children be uprooted as well as being turned upside-down due to your death? Now is the time to get prepared. Communicating about it is often filled with anxiety and apprehension. Here are some tips to get started:
- Set the tone - it is imperative to keep it positive - obviously this can be a sensitive subject so park the emotions and view this as an important, necessary "family protection" meeting. If you are uncomfortable starting the discussion you may say, "I want to make sure that you are protected if something should happen to me. I know it isn't fun to talk about but lets make sure we are prepared."
- Discuss what income would need to be replaced. There is no quick and easy answer to this question. Some life insurance agents will tell you that you need 10 times your annual salary. Others will tell you that you need closer to 15 times your annual salary. The real answer is: it depends upon your situation. When you are trying to figure out how much life insurance you need, consider factors like:
- Where in the USA do you live - how much is that home value?
- Do you own your home - how much is your total mortgage?
- Do you have children? Do you want to have coverage for their educational needs?
- How old are your children? This will help determine how long you need the insurance.
- What range of finances do you want for your spouse if something should happen to you? Start with ten times the annual household income.
- Discuss what debt you would want to wipe out: credit cards, mortgage, educations, ect.
- Discuss if you want term insurance, universal or variable universal insurance.
Discuss all these things before you go to purchase the insurance - it will make the purchase decision much easier.
Remember, this is a decision you need to make together. Protecting each other and making sure your family is taken care of will help bring you closer together and give you both peace of mind.
