Life Insurance Guide

We totally hear you—but mastering this stuff is really important.

Here are five super basic questions about life insurance, with five super-easy-to-understand answers.

Why should I have insurance at all?

Dying, it turns out, can be really, really expensive. You don’t want your legacy to be that you left your family in dire straits. 

None of us are getting out of this life alive. It’s a fact. We all face the same future. So, not to get all depressing but, if you died tomorrow, think about what would happen. Life wouldn't stop for your loved ones. The people you love, work with, care for (including your pets), don’t get to hit pause to adjust and get organized. Life keeps coming at them at the same rapid pace—expenses and all.

Right off the bat, they're hit with a big one: your funeral. Remember, if you had a job, your salary stops immediately, or very soon after. If you have children, consider who will be able to step in to help both in a practical and emotional way with their immediate needs. Will childcare be needed? Your partner may have to take time off work and could potentially lose wages because of it. Now he/she/they has lost a loved one, your income and their own personal income.

The bills, however, keep coming. If your household depended on two incomes, your partner needs an immediate plan to lower their lifestyle to fit one income. That may mean he/she/they has to move or sell your house (and incur moving expenses). And if the house doesn’t sell quickly, your partner may not be able to cover the taxes and the mortgage and may ultimately have to forfeit the house.

Which is why insurance matters: It's immediate cash that goes straight to your loved ones.

Why should I buy life insurance if I’m single?

First off, financial self-care has nothing to do with having a partner. Think of insurance as savings or investment vehicle, and saving for yourself is just as important as saving for those you leave behind. If you start saving when you're younger, you can save more and accumulate more wealth. Time is as valuable as cash. The more time your money compounds, the richer you become. So even if you don’t have a beneficiary, it’s still worth it for you.

You never know what the future brings and or what you may need down the road (like a down payment for a condo) but no matter what it is, you’ll be thrilled to have the money. Financial self care is freeing; it gives you the opportunity to avoid a life of financial fear. 

Another thing to consider? You may not be single forever.

When should someone sign up for life insurance?

When you're young and healthy. Your premium amount will be lower and you're easier to insure (because you're at a lower risk of dying) and, best of all, you'll have more time to accumulate more wealth. In other words, you can build meaningful savings that you can actually use to start a new business or care for your family.

Time is one of your greatest superpowers when it comes to money. Use it wisely and start early. Warren Buffett started at 11 years old. 

What happens if you put off getting life insurance until you’re older?

The older you are, the harder it gets. This reason is obvious: Insurance covers risk, and when you're older you're at a higher risk of dying (sorry, but it’s true). The price of the insurance and the premium are based on your age and health on the day you buy a policy. If you lock in at a price when you are young and healthy that is what you will pay for the life of this policy. 

Simply put, waiting until you're older to get life insurance is expensive and risky.

How can I get the most out of my insurance coverage? 

By using it to grow your savings. Saving is hard. But saving in a place where you can’t instantly access the funds is like having a built-in guardian angel. And if you're saving as a couple you compound and grow your money together. You’re working together as a team. You’re building something. And it’s growing. All the small selfless efforts you make, are literally creating a richer partnership. This in turn allows you to dream together and reinforce what you are saving for.

Maybe you have no solid dreams at the moment, but isn’t it amazing to know you’ll have the money to make some future dream come true? Maybe you both dream of starting a canoeing business on the Shenandoah or opening an avocado farm. Whatever it is, you’ll have the money to realistically do it. Opening your life to possibilities is critical to keeping love, hope and joy alive.