Thread: Life insurance?
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      02-22-2013, 08:28 PM   #5
ddk632
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Note also that while life insurance is a must have especially when people are dependent on your income, it's also important to consider disability insurance. I have both. This covers you not only if "something happens" but if something happens and you cannot work for an extended period of time.

Look at Berkshire (Guardian) life insurance, they have some great policies and less "fine print" than a lot of policies I considered when doing my shopping (this was a few years ago now) ... Now I just "set it and forget it" and pay the premiums, and don't worry.

I also have their disability policy, which if I were to become disabled (my policy is awesome because disabled is defined as no longer being able to do my particular job/function) I get paid the policy payout monthly tax-free - life and disability insurance payouts are tax-free if you pay for the policy yourself; wherease an employer-paid policy has a taxable payout - until age 65. During that time I can have jobs in a different field or capacity and it would not invalidate the payout.

I bought both policies as "Murphy's law insurance" because Murphy's law states (paraphrased) that you won't ever need this stuff unless you got into a situation where you needed it and didn't have it. And if that is proven wrong, which of course it can be - Murphy's law is not a real law - then I and my family will be covered no matter what.

Finally, when deciding on a coverage amount, while this will be limited by your income and net worth, it's important to consider the monthly obligations you would leave your dependends with, and calculate how many years the payout on life insurance will last them, or with disability insurance, compare the payout to your net take home income and make sure it at least exceeds the minimum monthly obligations that cannot be cut, such as debts, student loans, mortgage, etc. Half a mil may sound like a lot, but how many years will it last your dependents before they need to source additional income? Etc.

Good on you for thinking if this at an early age and considering others in your decision making.