How do you buy life insurance?

[celticqueen]

I need your help with a project that I've been putting off for a while. We really need to buy life insurance soon - especially since DH got laid-off this year and I'm currently the breadwinner. Plus we have a pre-school age son to take care of. I think I've been putting this off for 2 reasons - 1. No one every likes to think about dying and 2. I don't really know where to start. I'm pretty sure I want basic term insurance but I don't know whether I should start getting quotes from insurance companies or if it's better to go through someplace like my bank. Also, does anyone know of a good financial calculator which will help me figure out how much insurance I need. Since we're on a tight budget, I don't want to pay for more insurance than we actually need. Anyone have experience with this that can help me out? Thanks.

[moneywhisperer]

I got quotes through local agents + e-surance website.
Check the "BEST" ratings on the insurers & go with A or higher only (you want to make sure they will actually pay out the policy if you need it).

If you can find a policy that allows 50% cash out in the event of terminal illness diagnosis, that is a nice feature if you are the primary earner for the family.

The trick is to get your term policy while you are young and healthy - it is way cheaper than trying to get one when you are a little older and rickety.

[celticqueen]

Thanks for the help moneywhisperer. That gives me a great place to start.

[❤ mollymouser ❤]

Our situation is unique, because my wonderful DH is active duty military. (A lot of standard civilian insurance policies have "Acts of War" exclusions, as well as exclusions for airplane pilots, so we couldn't just purchase insurance anywhere.)

One thing to consider is how much insurance do you and your DH need? We talked and decided that we wanted enough insurance on my wonderful DH to, in effect, replace at least 10 years of his total annual income. Other people like to factor in how much it would cost to pay off a mortgage, or to educate children. You should keep all of this in mind.

Even if you weren't working, you would want to make sure you get insurance on BOTH spouses/parents. If something were to happen to you, your DH would have to pay more for childcare, etc.

As with everything else, it's worth your while to shop around and compare prices on good level term insurance.

[cronewitch]

Make sure you insure both people not just the wage earner. A non employed spouse has current and future value. A parent not working can be valuable for housework, child raising, and things but later go back to work when the child is older to help fund college and retirement so they must have insurance too. The wage earner has more value than a paycheck too and the surviving spouse might need to hire out some of what they do at home.

Get term policies the cheapest rates you can find. Remember a surviving spouse will also get SS for the minor children which can help replace the missing spouse a little bit.

When picking an amount find out where the price break is. If a million isn't twice what a half million is it might be worth taking the larger amount.

[deziloooooo]

try google , just like one can do for car insurence..as said above , then check companies as to ratings, .term is the way to go, the younger you are the better, usually does not , rates, go up for five years in most cases, remember it is Insurence , not a legacy your buying, meaning, once child is a adult, through with schooling, not really needed, beyond if you want to cover burial expenses, depending on how you believe that should be done, can cost $10,000, even more , you might have to remember the stone, plot, if don't have it , also has to be figured. {Cremation, lots less..though if want, still the stone and plot, or a mauseleum buriel}

[Small Biz Owner]

Just got some more. The rule of thumb I was told was 5 times your debt or annual income, but only with term insurance. If you hit a certain age and or net worth you can reduce the insurance because, supposedly, you will have less debt and more money saved.

Maybe a few insurance pros will post here?

[Small Biz Owner]

Spell check, emoticons, colors. Now to try pics and avatars

[Agatha]

Speaking as one who has been through it I would mirror the "ten years of income" if at all possible. Social Security will pay the surviving spouse until the child is 16 and the child to the age of 18 (or graduation from high school). My late husband was insured through his workplace and had doubled it just two years before he died. There was enough to allow me to stay home with my son until he turned 16. I stretched it through another 2 years.

You're right. No one wants to think about dying and I've heard a lot of folks complaining about paying for it but to this day I bless my late husband for thinking about it and loving us enough to plan for the possibility.

[celticqueen]

Thanks for the help everyone. This is my project to work on when I'm off work on Friday. It's one of those things I've been meaning to do but putting off because I was overwhelmed on where to start. Your info helped a lot.