How Much Life Insurance To Get

One of the most important things in life is life insurance and I’m pretty sure 2020 show a lot of us that, oh and also a will ( but that’s another video for another day)

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1. Term Insurance or Whole Life insurance
– Now there are three types of people usually
– And the type of person you are is going to determine which policy is best for you.

Here are the types:
– Type A: see life insurance as a settlement to make their family wealthy in case they passed away, so they get a big policy with whole life insurance. ( and they pay very high premiums, could be $700 and above) – kinda like an investing they see It but it’s not
– Type B: see as income to provide for their loved ones in case they are no longer there to provide and they didn’t get a chance to have their investments grow. ( these people take term insurance for a fraction of the price)
– Type C: they don’t get life insurance and they just leave a bill for the family.

Now Here is why I always recommend Term Insurance 99.99% of the time
– This is my policy quotes and they want, $65 for 30-year term insurance and its $1,000,000 policy
– But if I got permanent or whole life insurance they would want $688
– That’s 10x what I would pay for term insurance

But if you make the past 30 years and then die:
– The truth I can invest the difference which is around 620 every month into my portfolio at a 10% return over 30 years ( reinvesting my dividend)
– Which would then give 1.3M ( and I could also do this in a Roth ira, and all the money is mine tax-free)
– So whole life insurance is usually a dumb idea.

2. How Much Life insurance Should you buy
– The rule is usually 10x what you bring in every year
– So you give you’re family 10 years worth of your income even after your gone.
– And some people even do 17 years worth of you’re their income ( gives time for kids to be fully grown)

So here is some stuff to consider:
– Income: 10-17 years worth ( this give them enough to help cover your income but also other costs they will have)
– Mortgage: The average home is 200k ( so if your payout can pay that in full, it means your family doesn’t have to worry about living expenses)
– Education: $50-60k per child for college ( but with scholarships and going in the state this can be a lot less)
– Funeral: this cost an average of $7,000 so potentially you can just leave this money in a separate savings

Tip: speak to an estate lawyer about trust options has your beneficiary.

3. How I see it going down
– Say I nothing happens in 30 years, well my investments would have grown large enough to where I no longer require life insurance
– If something does happen, I would like them to make the payments, get rid of the mortgage
– Save for one year worth of emergencies in cash ( 60k
– Use the remaining 700k and invest the money into an in a retirement target-date fund
– And follow the 4% withdrawal rule, which provides them with $28k in income, without running out of money for 33 years ( but if the market holds up, they never run out of money)

Overall:
– It might not seem like a lot of money, but with 28k and no mortgage and just food, living expenses bills, and transportation
– That should be more than enough
– But hopefully, this plan never has to be taken into action.

Tip: remember to speak to a professional guys on estate planning, maybe I’ll someone on the channel to discuss it.

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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