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Choncé Maddox
- I'm a former life insurance agent, and I bought a policy to protect my family in case I die unexpectedly.
- I pay $25 a month for a $500,000 policy through Bestow.
- I could get the right amount for my needs at an affordable price, and set my beneficiary as I see fit.
As a former life insurance agent, I've heard many reasons people get life insurance. Some do it to build wealth, create an additional retirement fund, or leave a legacy for their family. Most people (myself included) just want to leave a nest egg for our loved ones to support their basic needs and future expenses.
This is why, a few years ago, I got a term life insurance policy worth $500,000. I set it up through Bestow, an insurtech company that sells life insurance online, and pay around $25 per month. I'm super happy with this standard policy for three main reasons.
1. I could get the right coverage amount for my needs
Determining the amount of life insurance you need is always tricky. I've never received life insurance through work, but my husband was offered coverage equal to one year's salary through his employer. This just isn't enough, and it only stays active so long as you remain at your job.
I knew I needed to get an independent life insurance policy that I could keep long-term. A common rule of thumb is to multiply your annual income by 10 to determine how much life insurance coverage you need. While I didn't do this exactly, I came up with a policy amount of $500,000 by thinking about what my husband would need to pay if I was no longer around.
Priorities would be:
- Paying off our mortgage and other small debts
- Paying for our son's education/college
- Wages for a year or so to take off work and adjust
We don't have a ton of debt and my goal isn't for my family to get rich off the life insurance payment, but to be comfortable and have their needs met.
Another thing that I like about term life insurance is that when my 20-year term is up, I can always get a new policy for a higher amount if needed. Or, even if our situation changes sooner and I feel I need to raise the coverage, I can cancel this policy and start a new one.
2. The monthly premium is affordable
Since I'm still considered somewhat young in the life insurance world, my premium is extremely low at just $25 per month. I hardly ever notice the funds leaving my bank account automatically each month. To lock in such a good rate means I'll only pay $6,000 over the course of the 20-year term.
Another reason I was able to lock in such a low premium is because I went with no-exam life insurance, also known as accelerated underwriting.
When I worked as a life insurance agent, I truly enjoyed researching and building relationships with insurers and helping clients find the best policy terms for their needs.
This also helped me learn about accelerated underwriting, which is when an insurer doesn't require an in-depth medical exam in order for you to get a policy. This means, no one has to come to your home to check your height and weight, draw blood, etc. Usually, you just answer a few basic health questions during the online application and instead of waiting weeks to get an insurance policy, you can have one that same day.
Even though I don't have any major health problems, the fact that my BMI is a little higher and my blood work results haven't always been perfectly normal tells me I probably saved money on my premium by foregoing the medical exam and getting life insurance online through Bestow.
3. I can easily change my beneficiary if I ever need to
Naming a beneficiary is one of the most important aspects of a life insurance policy, since this determines who the money goes to. Some people make the mistake of naming their child as their beneficiary, or even splitting the life insurance death benefit 50/50 between the child and a partner.
A few years ago, I learned that naming a child as your beneficiary doesn't actually mean they get the money. According to the Uniform Transfers to Minors Act, minors can accept monetary gifts and even inherit a life insurance payment. However, they can't actually use or manage the money themselves until they reach a specified age set by the state (usually 18).
In the meantime, the state would need to appoint a custodian or guardian to manage the money for them until they get older. The court makes this decision alone but tries to find a relative or other suitable guardian.
I don't want my loved ones to go through that whole process when I know my husband would make the best financial decisions for our son and raise him with care. So, I named my husband as the sole beneficiary on my life insurance and added another person I trust as a secondary option if my husband were not available to do so.
Luckily, I can change my beneficiaries at any time if anything ever changes, but I'm very pleased with the way it's set up now.
For me, life insurance is all about having peace of mind and taking responsibility for my family's future, even if I'm not around. I plan to live a long, full life and not need this policy, but having it does help me sleep more peacefully at night.
source https://www.businessinsider.com/personal-finance/right-life-insurance-policy-2022-11