4 Life Insurance Tips from Suze Oman for Life Insurance Awareness Month

Image Source: Getty Images

It’s worth taking her advice to heart.

Key Point

• There is a lot of misinformation about life insurance out there.
• If you are confused about the coverage you need, follow the advice below.

It’s almost the end of September, but it’s never too late to realize it’s Life Insurance Month. The purpose of Life Insurance Awareness Month is to educate consumers about the importance of having life insurance. However, there is a fair amount of misinformation about life insurance. So, if you’re unsure about it, we recommend following these tips from financial guru Suze Omann.

1. You don’t have to be rich to get life insurance

It’s a big myth that average or low income people don’t need life insurance because they don’t have much alternative income. “If you have someone in your life who depends on your income, you need life insurance,” Ohman said.

In other words, don’t get hung up on how much money you bring back. If your family depends on your annual income of $30,000, you need a way to replace that salary for them if you die unexpectedly.

2. Term life insurance is generally better

In general, life insurance can be divided into term insurance and whole life insurance. Term insurance provides coverage for a specified period of time. Whole life insurance will protect you for the rest of your life.

Additionally, whole life insurance accumulates cash value over time that can be accessed in a variety of ways. If the term insurance period expires and the insured does not die, no benefits will be paid.

At first glance, whole life insurance may seem cheaper. What you should know, however, is that whole life insurance comes at a cost. way More than term insurance, it’s not affordable for many people. That alone is a valid reason to choose term life insurance instead.

3. You don’t necessarily need a 30-year warranty

Some people who buy term life insurance opt for 30 years of coverage. But you don’t necessarily have to pay premiums for that long.

Let’s say you decide to purchase life insurance at the age of 45. Your only child at that time she is 5 years old. You may need a means to cover your child until he or she reaches adulthood. But in that case a 20 year policy might be sufficient. If you also want to cover your spouse who is the same age as you, a 20-year policy will protect your partner until their 65th birthday, at which point they will be eligible for Social Security benefits.

4. Don’t buy too much life insurance

Some people stop taking out life insurance because they can’t afford it. But if you want to keep costs down, don’t overdo it as far as your insurance death benefit is concerned, Orman says.

“A sensible way to find out how much life insurance you need to buy is to add up your dependents’ annual living expenses, or your annual contributions to your dependents, and buy 25 times that total. is,” she says. “For example, if your dependent needs $50,000 a year to cover living expenses, I ask that she take out a $1,250,000 life insurance policy, which means she will pay a $1,250,000 death benefit.”

Getting life insurance is an important step to protect your loved ones. If you don’t know how life insurance works, take the time to educate yourself so you can make confident decisions.