Suze Orman shares her "What-If" Policy.
What if something were to happen to your spouse? Would you worry that his/her life insurance wouldn't be enough to cover your expenses? Here's how to plan for the worst so you're not faced with a major dilemma!
Types of Life Insurance
There are two broad types of life insurance—term and whole life. Whole life policies provide insurance for your entire life as well as a savings component, but they come with hefty commissions—up to 80 percent of your first-year premium—that are not worth it at all. There are plenty of savings plans other than an insurance policy that are a far smarter move. With that in mind, in my opinion, the only type of life insurance that makes sense is term, which is good for a specific period of time. The premium is based on your age, gender, health, the death benefit desired, and the term.
Here's how to figure out how much insurance coverage you need:
I think you should have insurance in place until you're at least 65. Assuming you save for your retirement, once you reach 65 you won't need insurance because you'll have sufficient income from your retirement accounts, pensions, and Social Security.
The younger you are when you purchase a policy, the lower your monthly premium. For example, a 35-year-old woman in good health might pay about $70 a month for a $1,000,000 level-term policy over 30 years. A healthy 45-year-old woman purchasing a $1,000,000 policy for 20 years could pay about $90 a month; the monthly premium for a 45-year-old man will be in the vicinity of $120. Comparison shop at selectquote.com, quotesmith.com, termquote.com, masterquote.com, and www.iquote.com.
From the January 2004 issue of O, The Oprah Magazine
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