Life insurance is designed to protect your family or someone you care about. That can be in the form of paying off a debt, like a mortgage, replacing your income, leaving an inheritance or for estate planning purposes.

Does everyone need it? No. If you’re single and have no children then no, you do not need life insurance. If you’re married, have no debt and a lot of assets, then it’s doubtful you’ll need life insurance, unless it’s for estate planning purposes.

Recently both of my twenty-year term life insurance policies came due and I had a decision to make.

I have one child in college and another heading that way and I still have a mortgage on my house. If something was to happen to me, I want to be confident that my mortgage could be paid off and my children’s college education would not be interrupted.

It’s been 20 years since getting my original policies. I am now 20 years older, gained about 40 lbs. and have learned to enjoy smoking cigars. Even though I’ve been licensed to sell life insurance for the past 24 years, I’ve only sold two policies and have not kept up with the changes in the industry. My concern was that the premiums would be difficult to budget since I’m now retired and living on a fixed income.  I calculated in my head the very minimum amount of coverage I needed and hoped for the best.

I reached out to a friend of mine, Seth Waller, who specializes not only on regular term insurance cases but also getting the best prices for unique cases, such as cigar smokers. While he put me at ease, I was still skeptical. Seth sent me a link and it took all of about 30 seconds to fill out the form and I got a quote instantly online. The cost was half of what I thought it was going to be and I was able to get the coverage I really wanted verses the minimum amount of coverage I had convinced myself was enough. Even more comforting was the quote came back from Prudential, a large well-known company I am very familiar with. One day later, Prudential emailed me an online application that took about 5 minutes to complete.  From there an appointment was set with nurse for the basic height and weight measurements and some blood work.

Term insurance is inexpensive these days because people are living longer than ever before.

Isn’t that interesting? In an era of fear and worry about health concerns, humans at large are living longer and longer on average.

Most term life policies will mature and not be renewed before they are needed. I’ll be 70 by the time the term on my policies expire. By then I won’t have a mortgage and my children will be adults. My goal is that my family never benefits from these policies but in the meantime, I’ll sleep better at night knowing that I have coverage.

How much life insurance do you need?

Here is a great way to get started on that number:

1. Look at your total debt, including your mortgage balance.
2. Factor in future expenses such as college for your children.
3. Calculate how much income would need to be replaced and any burial expenses you want to cover.

For example:

Dan and Mary are both 49 years old
Two children: Ages 19 and 23 (23-year old just graduated college and the 19-year old just started college at a tuition of $20,000 a year)
Mortgage Balance: $165,000
Credit Cards: $6,000
Amount owed on cars: $17,000
Total savings: $30,000
Retirement Accounts: $253,000
Dan makes $70,000 a year and Mary makes $75,000

How much insurance would Dan need?

College: 3 more years at $20,000 = $60,000
Debt: $23,000
Mortgage balance: $165,000
Total: $248,000 so far

Dan also wants to cover his burial expenses and leave each child $100,000 and his wife $250,000 to replace his income for several years.

$248,000 to pay off college and the bills
$460,000 for inheritance, burial expenses and income replacement

$708,000 total

Dan could get a policy for $750,000 which would more than cover his obligations and wishes. I’d suggest a 20-year policy would more than cover his needs time wise. So, he could rock and roll with this. However, he could also split the $750,000 into two policies. One for $300,000 for ten years and one for $450,000 for twenty years which would save him some money and still protect his family.

Retiring Early and Term Life Insurance

Ideally you want to be debt free and have a cushion for future needs and wants when you retire, but the ideal situation is not a requirement to retire early. Look at your situation and determine if life insurance would help you sleep better at night. If so, click below for a free quote and include it in your budget. It doesn’t cost you a penny to get a little more information.

Retiring early with confidence is not just about having your DIAL in order but also making sure your family is protected.

This quote is coming from my friend Seth Waller, who I purchased my term life policy with. He’ll take good care of you.

Live free my friends