Browsing Category: Insurance

How to Talk About Life Insurance as a Couple

This is a guest post from my friend Eric Rosenberg, a personal finance blogger and podcaster at Personal Profitability in partnership with Mason Finance. He writes about personal finance, credit cards, entrepreneurship, and technology.

“Till death do us part.” This line has been read at countless weddings, and rightfully so we focus on the life part of our relationship, not the death. But that does not mean it is never going to happen. And as part of life as a couple, it is important to discuss the financial realities of death.

When planning for the long-term, life insurance is an important pieces of the financial security puzzle. Coupled with other savings, including retirement, it can create a safety net that covers your family for many years to come. Let’s take a look at why life insurance matters and how to discuss it as a couple.

Intro to life insurance

If you are new to life insurance, let’s do a quick primer to get you up to speed. There are a few key facts to know about life insurance before you start doing any research.

First, there are several types of life insurance. The most popular is called term life insurance because it is good for a period of time known as a term. Term life insurance is popular because it offer the biggest benefit for the lowest monthly cost.

The younger and healthier you are when you get life insurance, the less you’ll pay. Longer terms increase the price, as does a risky lifestyle that includes activities the insurance companies call “risky,” like rock climbing, skydiving, and flying small aircraft.

If the insured passes away before the end of the term, the policy beneficiaries get a payout. If the insured outlives the term, the policy expires for practical purposes.

Okay, there you go. We have the basics covered!

Figuring out your life insurance need

If you think life insurance makes sense in your situation (and it probably does), the next step is to figure out how much you need. Because life insurance policies are often priced in a cost per thousand dollars, getting too much life insurance may cost too much. But on the other hand, you don’t want to be underinsured and leave your family at risk.

To calculate what you need for life insurance, try the following formula:

[monthly expenses] x 120 + [big future expenses] = minimum life insurance need

Breaking it down, you are covering 10 years of expenses plus any major future expenses, like college costs or a mortgage payoff, which ensures your family has a long runway without worrying about going hungry.

Another way to find your policy value is using the popular 4% rule. This rule says you can safely withdraw 4% per year from an investment in perpetuity without ever running out of funds. For this calculation, use the following formula:

[(monthly expenses)*12]/.04 = minimum life insurance need

Using this method, a family with $3,000 per month in expenses, or $36,000 per year, would need $900,000 in life insurance.

Discussing life insurance with the significant other

No one ever walked into a room smiling and said, “honey, let’s talk about financial planning for me dying someday.” It is not always a fun conversation, but it is so important to talk about life insurance and other long-term financial planning needs.

In my experience, the best way to approach this is just being blunt, honest, and focusing on the facts. While you are probably not going anywhere anytime soon, it is good to be prepared just in case. That’s what insurance is for, after all, the “just in case” scenarios.

If you can go into the conversation prepared, it makes it smoother and easier. With that information in hand, you can discuss your needs and a plan to find and apply for the right life insurance policy.

What to do if you over insured

If you already have life insurance, this section if for you. Even when you have life insurance, it is a good idea to do an annual check-in to see how you are standing compared to your needs.

Because you are a smart saver and putting money away each month, you should see your savings balances grow and grow over time. Eventually, that savings level may grow beyond the point of needing life insurance.

For example, in the scenario above, a family with $3,000 in monthly expenses needs a $900,000 life insurance policy to ensure all costs are covered. But if you can save $900,000 or more, you don’t need that life insurance anymore at all!

If that sounds like you, check out this policy estimator to find out what your policy may be worth if you decide you no longer need it. Don’t let a policy simply lapse or you could be leaving money on the table.

Protecting your family is important

Your family’s long-term financial security is too important to gamble on. Instead of risking it all on a hope that nothing bad will ever happen, life insurance can help you hedge against that terrible “what if.”

Go head and have the conversation, even if it makes you a little uncomfortable. By planning for the future, you know you can rest easy in the present with your family protected by the right level of insurance.

Save On Renter’s Insurance

renters insurance apartmentMost people are well aware of the fact that if they are renting a home, apartment or condo then arenter’s insurance policy will protect your belongings against accidents, theft, fire, vandalism, etc. Some policies will even provide coverage against accidents where you, or a family member, is found liable.

Fortunately, renter’s insurance is rather inexpensive when compared to other types of insurance. However that doesn’t mean that there aren’t ways you can save money when it comes to your policy. Even if you could save fifteen dollars a month on your policy wouldn’t you rather spend that with your family instead of paying it to your insurance company? And who knows, you could even find that you are able to save more each month.

Pay Your Renter Premium Up Front

If you are able to pay your yearly premiums in one lump sum you should be able to get a discounted rate because it lets your insurance company know that you are a long term customer and are committed to staying with them. Usually, this loyalty is rewarded with savings.

If you can’t pay everything up front ask your insurance agent if there are price breaks for quarterly payments instead of month to month premiums.

Evaluate How Much Insurance You Need

We have a tendency to over insure when it comes to our property because either we believe that our stuff is worth more than it really is or we just make a rough estimate on the high side. Do a complete inventory of your possessions and work from there. Odds are your “estimate” will be much higher than the number you come up with after really looking at the value of your belongings.

Lower Your Risk to Lower Your Premiums

Deadbolt locks, fire alarms, gated communities, fire extinguishers and burglar alarms all help lower your risk of suffering a loss so they help keep premiums low. Make sure to check with your insurance agency to see what other things can help lower your risk in their eyes.

Raise Your Renter’s Insurance Deductible

If you are really looking to cut back on insurance costs the easiest way to do so is to go with a higher deductible. Unfortunately this means you will wind up having to pay more out of pocket in the event you have to file a claim but if it is short term savings you are looking for this is the best route.

Choose an Actual Cash Value Policy

There are two types of policies, actual cash value that pays you what your belongings are worth at the time of the claim, and replacement cost, that pays you the cost to replace the items regardless of their value. Obviously the actual cash value will pay far less as things depreciate over time but again, if you are looking for something to lower your premiums immediately this is one way to go.

Jeff Orloff writes to the Renter’s Insurance blog.

Photo Credit: williamcho

Smart Habits to Lower Health Costs

Try to maintain a healthy lifestyle and it’ll reap dividends beyond money saved. It’s amazing how much health insurance companies charge even if you’re in good health. With some employers finding ways to switch the burden over to employees on finding affordable healthcare, bring proactive with your habits and lifestyle now can help care costs

Some changes  are harder than others, but they are all completely doable.

  • Quit Smoking:This habit can cut your life short and it has been linked to other health problems. This in turn leads to higher costs.
  • Exercise regularly: Try being active 3x a week for at least 20 minutes. You may also want to consider participating in an amateur sports league to get yourself committed to a routine.
  • Watch what you eat: Obesity can increase your chances of diabetes, heart disease, and joint problems.
  • Get a hobby: Hobbies can reduce the stress that you feel. That in turn can help your mental health and enrich your life.
  • Go for generic drugs when possible: Some drugs are available in generic form at less than half the cost.
  • Do routine exams: It’s better to catch something early than to wait until it develops into something worse.
  • Try health clinics: If you’re pinching pennies, this could be a good option. With my health insurance, I pay $30 a month for birth control pills. By going to the university health clinic, I pay $40 for 3 months’ supply. I save $240/year just by doing that.

Please talk to your doctor before you go on a diet or change medications. They are in a great position to assess your health condition and recommend a plan that can work for you.

Image courtesy of Vichaya Kiatying-Angsulee /

Are You Getting a Deal on Your Car Insurance?

If you’re looking at lowering your monthly expenses, but you can’t find any wiggle room in your budget. You may be pinching pennies when it comes to rent, food, and bills. However there may be a bill that can cut in half by just shopping around – car insurance.

Save Money on Your Car Insurance 

For many people they have been with the same car insurance for years and stayed with them simply because that’s who they’ve been with. They haven’t checked around and don’t know if the rate they are paying is a good deal.

You may be surprised by how much money you can save. It has worked for us. We used the money saved to help us pay off our car loan a few years ago. Now we have extra money to use for saving, investing, or paying off debts. If you saved a bit of money, how would you use it? How do you find the best deal?

Shop Around for the Best Car Insurance Rates From Home

If you’re looking for a great deal on car insurance, then shopping around and getting quotes can be a very smart move for your budget. I highly recommend comparing rates because that how we able to cut our auto insurance premiums by about half, simply by switching providers.

My mom was able to lower her bill with her current insurance company by simply letting them know she was shopping around and wanted to get the best value.

Every so often we review what we have to make sure it’s still a good deal. Go Insurance Rates offers you an opportunity to quickly get quotes from big insurance companies such as Progressive and Allstate. Of course you can visit all of the insurance companies and get quotes, but visit one site can save you time and money.

Thoughts on Saving on your Car Insurance

How many of you have shopped recently to make sure you’re getting a good deal on your car insurance? Have you’ve been able to save money? How much?

Photo Credit: FotoSleuth