This can be a tricky question, but there are a couple of ways to go about finding the right amount that you need without wanting to pull your hair out!
You can calculate how much you need and base the question on what kind of financial picture you find yourself in now, and what kinds of financial milestones will you want to cover. This can be a useful method if you have children or are a meticulous person— but I know that some of us would like a more simple method.
A more elegant solution to this question is just buying coverage equal 5 to 10 times your annual salary, so if you make $60,000 per year you’ll want to have a policy of $300,000 to $600,000 depending on how much of a premium you’d like to pay per month.
Using either of these methods, anyone establish the amount that they think their family will need in the event of their passing. You can include things like college tuition, ability to pay estate taxes, and even other expenses like a first car for a child or grandchild— just be sure to calculate it in before making your decision!
There are two different types of life insurance policies: Term and Permanent. Term policies are set over a period of time and usually are much more affordable than buying a permanent plan. Term plans are usually used when you are safeguarding against pre-mature death, and this is done for many different reasons, such as working in a
Example of a dangerous job!
dangerous field/environment, or lack of savings or other sources of family income. So just remember, as long as your payments are up to date during your term, you’ll be just fine!
With a Permanent Life insurance policy, you’ll be covered until you pass away—but just like a Term policy you will have to always pay on time or you’ll lose your coverage! Permanent policies are used for estate planning and are also used to transfer wealth to beneficiaries, but since these policy payouts are usually pretty large it raises the prices of premiums for Permanent policies a lot more than a Term policy.
One strategy to use if cannot afford a permanent policy yet is to use a Term policy until you feel that you are ready to take on the higher premium—that way you can have access to life insurance for a lot less than it would for the same amount of Permanent insurance!
By Aaron Young
A life insurance policy provides your family a lump sum payment if you happen to pass away as to ensure their financial security in the wake of your absence. It’s a simple, but very effective concept that can ensure your family’s livelihood for years to come.
When you buy a life insurance policy you essentially enter into a contract with the insurance company that guarantees a payment to your beneficiaries (Assuming you kept up with your premiums!). The upside to this process is there is almost no delay with the payment upon death and there is a factor of privacy since there is no probate period (These processes usually are made public, so anyone can see) for your beneficiaries to go through—and this payment is typically tax-free!
If you have a Term life insurance policy, this period of protection will only last through the life of the policy (10, 20 years for example), and a Permanent policy lasts through your death assuming you always pay your premiums on time! Both of these types of insurances can be very useful when utilized correctly, so find which one is the best fit for you!
By Aaron Young
Talking about stressful subjects such as life insurance over coffee does help!
Talking about life insurance is never fun, and it is not a process that anyone wants to undertake—but it is a mandatory conversation that all people need to have at some point in their lives. It can be a crucial element to a financial plan and should be created and set-up when waters are calm and while you are still young. The reason I say this is due to how many people wait until they are up against a wall and are forced to buy it— usually at a much higher price.
If you do decide to take action and start to plan these situations out, you’ll notice that it is much cheaper to start a plan the earlier you start your coverage. Reason being is there is less risk for the insurance company when you are younger, versus the higher risk of payout for an older person; so in short, higher risk for the insurance company, the higher of a premium for you!
But no matter your age, it is smart to have a good life insurance plan. If you have have a family you shouldn’t leave them high and dry without any type of financial assistance if something were to happen— if you have debt this becomes very important too since if your children are not adults, creditors will take from your estate to pay your debts, potentially leaving them with nothing! Or if you have a mortgage, you’ll want your family to be able to either keep up with the payments for the foreseeable future or to be able to buy the family home outright. So as I was taught in Boy Scouts: always be prepared, in all aspects of your life (Even Life insurance)!
By Aaron Young
Yes, there are some situations where you may have free home warranty coverage on your home. These scenarios differ and have their pros (Well…it’s free!) and their cons.
Sometimes when acquiring a new home, a home warranty will be bundled into the sale by your real estate broker or agency, and usually these are given as a thank you/welcome home present. These plans are usually short lived and last only a year on average, so it is worth it to start looking around at what you want during that year!
If you have built the home with a builder sometimes the builder will include it as well to let you know that their build is covered, and you can live in the house with some peace of mind. A lot of times these warranties are limited to certain aspects of the house, such as plumbing, electrical, and air conditioning system— but these types of warranties usually are free and sometimes last longer period of time than one through a real estate agent.
If you remortgage your house, your lender may include it as part of their deal with you— but these you usually will have to opt in and these bundled plans will act like a normal home warranty would and can vary in the amount of time it is free!
When you are getting a free warranty, make sure you understand the terms of the warranty and how you can cancel their coverage before/after the period is over. If you find a new warranty that provides more value to you, it might be worth it to get rid of the free warranty and start with one that you prefer, just always keep your eyes and ears peeled for what you want!
By Aaron Young
Home warranties and home insurance both cover surprise issues with your house and the comforts that are inside, but there are differences between the two that should be addressed!
Usually in a home insurance policy there will be exclusions in the contract that would not hold wear and tear/age as a valid reason for a claim, but it would be covered if something happened to the appliance, such as an electrical fire in your house— so your destroyed appliances in this case could be covered with home insurance! Depending on your coverage, you can also cover your home for things like flood, theft, and acts of god, just depends on how much you want to spend!
Home warranty on the other hand would cover wear and tear on appliances and would help you save money if you have a plan that replaces an appliance if a repair cannot be made. Think of home warranty as something that helps when an appliance naturally goes to pasture, and home insurance as something that helps when an appliance gets knocked out by various acts of destruction!
By Aaron Young
A Home Warranty is a type of service contract that will repair or replace appliances and crucial parts of your home, such as refrigerators, water heaters, and air conditioning— it felt like the Sahara in my home when mine died this summer, so thank goodness for home warranty!
But Home Warranty will cover other things such as your washer or oven when they decide to kick the bucket.
Home warranties can also be extended to your pool and spa, and these add-ons are usually at an extra cost, but can save you a lot of money, headache, and heartache when your pool pump gives up a ghost!
How does this work? Well, what happens is a technician will come by and screen the situation at hand, if it’s determined that the appliance is no longer working due to defect, age, or normal wear and tear then you will either have it replaced or repaired by a qualified specialist all for a small fee while the warranty company covers the rest.
This is an important component of any homeowner’s arsenal of tactics to combat trouble when it decides to say hello and can be the difference between you paying a couple hundred or a couple thousand— neither is fun but I would rather take $200 Mr. Trebek, not $2000.
By Aaron Young