you might need term life insurance (and here’s how to get it)

by Alison Green on September 12, 2018

And now a break to talk about a sponsor…

If you have people who depend on you for financial support, you presumably want to ensure that they’re taken care of when you exit this mortal coil. Life insurance can help provide some financial security when you’re gone. Some signs that you should be considering life insurance are:

  • You’re married with shared financial obligations.
  • You have kids or are about to have kids.
  • You have other family members who rely on you financially.
  • You have significant cosigned debt, like student loans, a mortgage, or a car loan, that would fall to your partner or a co-signer to pay off if you die.

People often assume that if they have life insurance through work, they’re covered and don’t need to think more about it. Many employers do offer some term life insurance coverage as part of your benefits, but generally, work-sponsored plans equate to only one to two times your base salary. In other words, if you make $60,000 and you’re covered at two times your salary, your beneficiary would receive, at most, a $120,000 payout upon your death. That can sound like a lot, but if you’re married with kids and a mortgage, it would go quickly. That’s why most experts suggest coverage of five to 10 times your salary.

Haven Life, the sponsor of this post, is one place to go to get affordable, high-quality term life insurance online. They’re a new kind of life insurance agency, backed and wholly owned by MassMutual – that’s committed to making life less hard. They’ve modernized the process of buying term life insurance so that it’s simple, digital, and dependable. With Haven Life, you can apply online and get an instant coverage decision. If approved, you can start your coverage that day.

Since life insurance gets more expensive to purchase as you get older, it’s smart to apply now (because your rate will stay the same for the duration of your policy’s term with a level term policy) and save yourself money in the long-run. You can get a free, no-obligation quote for term life insurance here. (But just to give you an example, a healthy 35-year-old woman can purchase a 20-year, $500,000 Haven Term policy issued by MassMutual for about $18 per month.)

One more thing! Haven Life also just unveiled Haven Life Plus, a rider offering a suite of services available to its customers as part of the policy. It includes:

  • A digital solution for creating legal wills for you and your partner at no charge through Trust & Will (a $129 value). It also includes a healthcare power of attorney and directives.
  • A secure online safe deposit box for storing, managing and sharing your family’s important documents at no cost through LifeSite (normally $80 per year).
  • A discount for an at-home health test that determines how well you are aging (or not) based on the length of the protective caps on your DNA strands through TeloYears ($30 for policyholders; normally $99).
  • A 15% discount voucher for family health services at MinuteClinic, inside CVS Pharmacy and Target stores.

Check them out!

This post is sponsored by Haven Life Insurance. Haven Term is a Term Life Insurance Policy (ICC17DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and not be available in all states. Our Agency license number in California is 0K71922 and in Arkansas, 100139527. 

Haven Life Plus (Plus) is the marketing name for the Plus Rider which is included as part of the Haven Term policy. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners).

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{ 30 comments }

{ 30 comments… read them below }

  1. Ladybug*

    I think this site reads my mind. I was *just* thinking the other day about whether or not I needed to obtain life insurance!

  2. Cordoba*

    If you have dependents who rely on your income you *need* life insurance, and probably more of it than you would think.

    If you are insured for 10x-15x your pre-tax income whoever gets it should be able to stick the lump sum in an index fund and draw off an amount roughly equal to your after-tax income indefinitely without eating into the original investment. The insurance effectively *replaces* your (now missing) earnings for the rest of your working life.

    It’s great that people carry $10k in life insurance to pay for their funeral and whatnot, but that won’t go very far for a family that just lost a wage earner.

    No, I do not sell insurance. I’ve just wound up on the wrong side of having a parent who croaked and thought that the half a year’s income worth of insurance they had would be enough. It’s not.

    1. Bea*

      Agree. Thank you for this breakout

      Luckily it’s not my own story but had an old friend. One wage income family, two disabled dependents. Wage earner died suddenly. They lost their home and only by the grace of far away relatives and a friend who helped get them there did they not end up on the streets. No car to live out of either.

      1. Elder Law Atty*

        Also, you need:

        Durable Power of Attorney
        Health Care POA/Advance Directive/Living Will (these vary by state in terms of what they do and what they are called)
        Prepaid funeral and burial or cremation

        Ensure all beneficiary designations on non-probate assets (e.g., IRAs, 401(k)s are up to date
        Anything with a title is up to date
        Anything that has a POD designation (e.g., most bank accounts) are up to date

    3. Rachel Morgan*

      I have 10x my salary just for this reason. I have a husband & 2 kids, and my income would be very, very much missed.

  3. Persimmons*

    Also consider long-term care insurance, particularly if certain diseases run in your family (talk to your doctor). One of my relative’s care for a degenerative illness cost over a million dollars total. She hit the LIFETIME maximum her plan would pay out before she was old enough to qualify for Medicare.

    1. grey*

      That’s really what I need to consider. That’s my biggest concern. This may not be appropriate – but does anyone have any recommendations?

      1. $!$!*

        You might want to look up bogleheads forum for the best LTC policies. They can be pretty tricky and it’s important to keep the ppw bc ive had patients with LTC insurance who have had policy premiums and payouts change. A big thing I’ve ran into is that the certifying ppw can be a hassle and some doctors charge for it. A good bet is to have the company (private duty caregiver or nursing home or assisted living , whatever) help bc they know how to fill it out so the LTC company will actually pay. Also, some policies may only pay for in home care, or nursing home care, which can be another issue to work through. And some policies have you pay out (I guess like a deductible?) before they start to pay.

          2. grey*

            +1. I’d never heard of bogleheads forum either, so that took some work deciphering what was said, but I do appreciate it!

        2. Burnett*

          Former LTCi agent, here! Most policies don’t have a monetary deductible, but they do have a waiting period. You can take a wait anywhere from 0-180 days (the long the period, the lower your premium, generally). And most policies nowadays cover all types of LTC – in-home or nursing – without differentiation.

          LTCi was kind of a mess when the product first came out, so the people who need care now have all kinds of problems depending on which company they bought through. But the last few decades have seen disreputable companies leave the industry, and the ones left are a) much more stable and b) offering much better benefits than they used to.

          I’d recommend it for anyone over the age of 55 or so.

      2. Elder Law Atty*

        Look for

        (1) How many years it covers – 5 is minimum, 10 is better, unlimited is preferred. Do not get a policy that covers less than 3 years
        (2) Base amount it covers ($4000 per month+ or don’t bother)
        (3) Inflation rider (will the amount per month go up with inflation or is it static)
        (4) Does it cover nursing home only or also long term care?
        (5) What preconditions do you have to meet to qualify (two activities of daily living = nursing home, needing custodial care = assisted living)

        Then you need to figure out what the current rates are in your state.

        In mine, its $4000 minimum. An Alzheimer’s bed is $10K+ per month. And I’m in a “poor” state where things aren’t as expensive as NYC or Cali.

        So if you have a policy that only covers $3000K, where is the extra $1000 per month coming from?

        A lot of people get these policies and go for the minimum. When they need them, the policy doesn’t cover enough, so they bleed down their assets then go on Medicaid. In essence, they would have been better off without the policy.

        This is one area where – even if it is expensive – go for the best plan you can stretch and afford.

        The policy should cover the full cost of care in your state for a minimum of five years. If it doesn’t, then don’t bother.

          1. Elder Law Atty*

            Also, fyi for everyone: If you have a parent or grandparent looking to go into assisted living or a nursing home, please do not use a trust mill or an annuity mill or even an attorney who isn’t a specialist. I say this as someone who makes $$$ cleaning up messes other people make. Messes that break my heart.

            Sorry, but you aren’t going to get to keep that farm your family has owned for 150+ years…
            Sorry, but you have a penalty period and have to come up with the cash somewhere because Medicaid won’t pay…

            If I never have to say those words again..

            How do you find an attorney?: NAELA and Elder Counsel have info on their membership. They are also very good sources for information for you on these topics.

  5. Anonymous Finch*

    When I’m hired to write a will and advanced care directives, I always spend some time chatting about insurance. Life insurance, long-term care insurance, and disability insurance are the “holy trinity” that I tell my clients to aim for.

    Life insurance can be an incredibly thoughtful gift to the loved ones you leave behind who will have to take care of your affairs. It pays out quickly, as opposed to dealing with estate matters, and even a small policy will go a long way toward paying end-of-life and funeral/burial expenses.

    Long-term care insurance and disability insurance aren’t always as obvious to think about, especially when you’re younger. But they do warrant some research. It’s tough to self-insure one’s old age and infirmity, especially if something happens that disables you from doing the work you’ve been educated and trained to do.

  6. Emily K*

    Another situation that people often don’t think of is pets that can be very expensive especially in their senior years. I have three pets and no partner or children, so I took out a supplemental $20,000 policy through my credit union that I pay $2/month for. Unlike my regular life insurance which pays out to my nearest of kin, the beneficiary on my supplemental policy is the person who has agreed and is named in my will to care for my pets if they outlive me.

    There are formal legal arrangements you can make called “pet trusts” that ensure the money is only spent for the good of the animal, but I chose a caretaker who I trust and who loves my pets almost as much as I do, and skipped the complicated legal stuff, but it’s an option if you are less certain about the person you choose.

    Because my situation is relatively uncomplicated by not having any children or vast assets, my will didn’t go through a lawyer either – it’s just a short, one-page document that I emailed to all my family members that identifies a few special items to go to particular people, names the person who will care for my pets, says anything left of my estate after expenses should go to my only sibling and her children, and indicates how I would prefer my remains to be handled.

      1. King Friday XIII*

        Many credit unions offer a small life or AD&D plan to members at no cost, and have higher options for minimal fees. It’s worth checking into.

  7. JKL*

    A few things to consider:
    Your life insurance coverage through your work ends when you leave the company. You can convert to an individual policy but it’s costly as you lose the group underwriting.

    Check your company’s coverage; a lot of companies will pay for your base salary timed 2 or up to a certain amount. During open enrollment and new hire periods, you can buy up into better coverage without needing to undergo a medical exam.

    Look for bundling options for a better rate. I have my auto insurance, homeowners insurance and life insurance through one company and get a multi line discount.

    Signed:
    A licensed health, accident and life insurance agent in Connecticut, New York, New Jersey and Rhode Island.

  8. Double A*

    Will they consider people with mental health conditions? That has been a stumbling block as my husband and I look for life insurance, even though he is under the care of a doctor, on meds, and not suicidal.

    1. TardyTardis*

      I think in some insurance policies they have a waiting period and/or ‘suicide doesn’t count for the first two years’ (my brother was issued one like that at the Naval Academy, and being a plebe aka In Hell, he kind of focused on that one).

  9. Thomas*

    Also, get it sooner rather than later. I have a term policy that I can and have been reneqing, I believe indefinitely. Since getting it, I got a cancer diagnosis, and can’t get more term life except through employer group-underwritten plans. I’m now in reasonably good health, and while it’s likely I’ll need treatment again at some point, it’s also probable that I’ll live to a ripe old age and die of something besides cancer. But that diagnosis takes you right off the underwriting tables.

  10. Alex from Haven Life*

    Thanks for your question — I’m Alex, a member of Haven Life’s customer support team. It’s possible to secure life insurance coverage for those with mental health conditions. Eligibility depends on a range of specifics about the diagnosis, history, and any medications, which would be reviewed by the underwriting team. In some cases, coverage may come at a higher rate, and in severe cases, coverage may not be possible. Of course, we welcome your husband to submit an application online as a first step. If you have any other questions, please feel free to contact our customer support line at (855) 744-2836 (M-F, 9AM-6PM ET) or email help@havenlife.com.

  11. Burnett*

    Really kind of glad to see something like this on an HR/work advice site! Life insurance is essential if your income helps other people live and thrive, or if you have debt that would be passed to someone else if something were to happen to you! Term is a great way to get a lot of coverage for a relatively low price, and I highly, highly recommend following this advice and scheduling a consult with an agent.

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