How much Life Insurance do you need? How Much Disability Insurance do you need? Do you have a Will?

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Do you have enough Life Insurance?
Disability Insurance? A Will?

If you have a new baby or small kids and you haven’t taken care of these three issues, it is probably weighing on you, just like the unfinished baby book. But this is much, much more important.

1. Life Insurance
A rule of thumb is that you need 6 to 10 times your annual income in life insurance. You likely need to supplement the life insurance provided by your employer. Calculate how much life insurance your family needs for your mortgage, living expenses, college educations etc. with the simplest
Life Insurance Calculator we found (from a non-profit)
“Term” life insurance makes sense for most families because it covers a set period with affordable premiums. If the term expires before you do, there is no cash value in the policy. Rates are fixed for an initial period, but then go up as you age.
“Whole Life” is permanent and more complicated as it offers both an insurance policy and an investment account. Premiums are higher than for Term, but rates are fixed and you can also cash out the policy in the future.

2. Disability Insurance
You are statistically more likely to become disabled, and unable to work, than to die. About 8% of adults have a health problem or disability which prevents them from working for a period of time -- this is a high number! Most jobs offer some disability insurance, but it is usually not enough. A rule of thumb is 60 percent of your income. You likely have many working years before retirement. What if you/your spouse can never work again?

Disability Insurance Needs Calculator
Checklist for Disability Insurance Important questions like: Can you receive benefits if you are unable to perform your own occupation, but could still do another line of work? I.e. you would want to collect Disability if you could no longer be a realtor but you could still physically flip burgers if you had to, right?

3. Wills
Did you designate a legal guardian for your children?

Do this now, don’t wait for a big airplane trip like a lot of people do. Your lifetime odds of death in an Air Travel Accident are about 1 in 6,000 while your odds of death from a Motor Vehicle Accident are 1 in 85! Do you drive every day?

§ Without a Will, the court will decide everything about your estate and kids. Not likely what you would choose. It is also slow and costly for your heirs.

§ A Living Trust is used to transfer property to beneficiaries. But unlike a last will, a living trust is not usually subject to probate court, which can take years and cost thousands in court fees.

§ A Living Will lets you outline important healthcare decisions in advance, such as whether or not to remain on artificial life support.

Ask your friends for estate lawyer referrals, or do it fast and cheap online, at least as a placeholder, at LegalZoom.com it’s less than $100.

Read this first: The Importance of Wills
Get started here: Wills & Estate Planning

(We have no commercial relationship of any kind with Legalzoom.com)

Update your Insurance & Will
Did your designated guardians get divorced? Did you buy or sell a house? Lose a job?Put a reminder in your calendar to discuss annually if these documents need updating.

Sources: Cornell University Disability Statistics, National Safety Council

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