Sayonara, 138! I weighed in at 137 this morning, for a loss of 1 lb. last week. It was a week that tried my willpower. Lots of chilly temps, cloudy skies, and rain. Conditions that conspired many times to making my walks seem so not the thing to do. And wouldn't you just rather curl up indoors on a day like that, eating comfort food and watching season 4 of The Office on DVD? Well, I managed to pull one out in the end, but it wasn't always a given. Onward and upward! I've got 3 more lbs. to go to reach my mini-goal of 134 by Saturday, February 20...
Life insurance - the face of your policies should amount to 2 or more years' income
When it comes to life insurance, the authors of The Manual don't have any insta rule-of-thumb on what percentage of your income should be spent on premiums. Probably because the amount and type of life insurance policies varies so much per family.
How much life insurance? For a family of two, enough insurance to pay bills in case of the husband's death, and to provide a temporary income for the wife - say a $5000 ordinary life insurance policy type costing $80-$100 a year. When a child is expected and for every additional dependent in the family another policy should be taken out in temporary-term life insurance of $1000 to $5000 or more, costing only $10 a year for $1000, and carried until the child reaches majority.
As a one-member, single-income family, I guess the only life insurance I need to carry at this point in my life is enough to pay any bills related to costs of death - funeral expenses and something to cover whatever costs there might be in closing my estate, however small it might be. My employer pays about $1 every two weeks to carry a basic $15,000 life insurance policy in my name. That's probably enough, right?
The Manual goes on to address retirement savings. For those without a pension or who couldn't look forward to any kind of Social Security income, it was recommended that they purchase an "old age annuity" from their life insurance provider. I've been contributing to a state retirement plan for two years now and have been paying into Social Security since I was 16 years old. I'm not always sure that the Social Security will even be there by the time I retire, but at least I have something else now for retirement savings.
Most teachers look forward to a pension, and are depositing annually 5 per cent of salary for it; through Social Security legislation, most workers anticipate old-age pensions; any family that does not have this old-age protection should devote 5 per cent or more of income to an old-age annuity secured from a life insurance company.
Finally, some sage advice on payment plans. You can save big bucks - or purchase a better policy - if you pay the premium in one lump sum instead of in monthly payments. This is something I need to begin doing when it comes to auto insurance.
Families that are buying their life insurance by weekly payments to a collector should transfer to a plan payable every three months, or once a year, at the company's office, thus increasing their insurance by half as much again at the same annual cost. In a few states it is possible to buy life insurance cheaply through savings banks. This type of insurance should be made legal in all states.
Life insurance is the last of the categories of expenses for which the Manual provides some guidelines in its "pattern" budget. Next up: a summary of my income and expenditures for the month of January 2010. How do my actual income and expenditures compare to what I've estimated I'm spending in each category?
10 comments:
My father in law works in insurance, and he always insists life insurance should be at least twice your yearly income.
Congrats on loosing another pound! You're almost there!
Wonderful job on your weight loss!
Thanks, Zebu!
Amanda, it sounds like your father-in-law must have been reading some vintage advice... Two years' income is exactly what they recommend - at least for a couple where a replacement will be needed for the husband's income should he die.
Congratulations on the weight loss. You are amazing!
Please (pretty please?!) up the amount of your life insurance as soon as possible. $15,000 won't cover the costs. The funeral costs and casket alone cost right at $10,000. That doesn't include a headstone, burial plot, cemetery costs for opening a vault or burial site. There are so many other costs to the family (paying the priest, phone bills, travel expenses, food, etc., etc.) that a little extra helps them with expenses. If you have debt or should buy a house, up your life insurance enough to pay all the bills for several months.
Congratulations on losing another pound, a very difficult task post-holidays and with frigid temperatures whispering in your ear about staying warm with comfort foods!
Packrat, how 'bout if I'm cremated and don't need to be embalmed or purchase a casket? That should make those costs a lot less. And - in all seriousness - is what I want. You make a very good point about being able to pay the bills for several months, especially if I own a home at some point.
Lily, sounds like you're well acquainted with the voice of temptation! Comfort food is tougher than ever to avoid these days. It was easier when temps were broiling outside.
Jitterbug - yes, cremation is quite a bit less expensive. Some people are all or for it; others completely against it. The reason I asked that you up your life insurance now is that the older you get, the more expensive it gets. :( If you buy now, the lower rate should be "locked in".
PS - Always go with whole life. Don't waste your money on term insurance. My advise for the day. LOL
Sensible advice... I must investigate what kind of insurance I have. And what the heck difference there is between "whole" and "term." I'm so underinformed! :(
Okay, whole life is just that. It is good for your whole life (make sure!) and builds cash value. (We have had to borrow from ours a few times. Ugh, but at least it was there to borrow.) Term life is for a specific amount of time. When the term is over - poof! - no more insurance.
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