October 27, 2016
I was shopping at Costco recently, enjoying the great value as always. While waiting in line to check out I got to chatting with a few young mothers-with babies in tow-who were waiting as well. Me being me I was curious if these women who obviously knew a thing or two about shopping had bought protection for their family.
Not one had life insurance. They loved those babies more than anything, yet none had purchased the single best way to protect the kids.
The crazy thing is that purchasing life insurance is easy—and cheap! All you have to do is head over to an online site such as SelectQuote or Accuquote and shop for a term insurance policy. If you have young kids, buy a 20-year policy; so no matter what happens to you, there will be resources to raise (and educate) the kids. I recommend you ask for a 20-year level term. The “level” means your premium will never change.
And you want to talk deals? A 30-year old woman in good health might have a monthly premium of just $20 or so for a policy with a $500,000 death benefit. For a 35-year old the cost rises to a whopping $25 or so a month. A forty year old will probably pay less than $35 a month.
C’mon Moms. (And Dads). You can’t tell me that less than one dollar a day is too much to ensure your family is safe no matter what.
Once you’re ready to purchase life insurance an important step is to name a beneficiary for the policy. Please know the absolute worst thing you can do is name a minor child as the beneficiary. Children under the age of 18 are not allowed to directly inherit any money. If you leave money to a minor, your beneficiaries will be hauled into a court, where a judge will be appointed to oversee how the money is spent. That’s going to be a huge hassle.
The better move is to create a living revocable trust, and name the trust as the beneficiary of the life insurance policy.
I know a trust sounds like some fancy (and expensive) document for the super rich. You couldn’t be more wrong. A trust is a simple and easy way to protect your family. While you are alive, you are in control of the trust. Your official title will be Trustee of your trust. But you will also appoint someone to take over control of the trust when you die. If you were to die prematurely, the life insurance would be paid to the trust, and then whomever you appointed your successor trustee would then use that money exactly as you have spelled out in the trust, for the benefit of your minor children.