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- I am a former life insurance agent and bought a policy to protect my family in the event of an unexpected death.
- I pay $ 25 a month for a $ 500,000 policy through Bestow.
- I could get the right amount for my needs at an affordable price and set up my payee as I see fit.
As a former life insurance agent, I have heard many reasons why people get life insurance. Some do it to accumulate wealth, create an additional retirement fund, or leave an inheritance for their family. Most people (myself included) just want to leave a nest egg for our loved ones to support their basic needs and future expenses.
This is why, a few years ago, I got a term life insurance policy worth $ 500,000. I created it through Bestow, an insurtech company that sells life insurance online and I pay around $ 25 a month. I am very happy with this standard policy for three main reasons.
1. I could get the right amount of coverage for my needs
Determining the amount of life insurance you need is always complicated. I have never received life insurance through work, but my husband was offered coverage equal to one year’s salary through his employer. This is not enough and it only stays active as long as you stay at your job.
I knew I needed to get an independent life insurance policy that I could keep for the long term. A common rule of thumb is to multiply your annual income by 10 to determine how much life insurance coverage is needed. While I didn’t exactly do it, I came up with a policy amount of $ 500,000 thinking about what my husband would have to pay if I wasn’t around anymore.
The priorities would be:
- Pay our mortgage and other small debts
- Pay for our child’s education / college
- Salary for a year or so to take off the job and adapt
We don’t have a lot of debt and my goal is not for my family to get rich on paying life insurance, but for them to feel comfortable and meet their needs.
Another thing I like about term life insurance is that when my 20-year term is up, I can always get a new policy for a larger amount if needed. Or, even if our situation changes sooner and I feel I need to increase coverage, I can cancel this policy and start a new one.
2. The monthly premium is affordable
Since I’m still considered somewhat young in the life insurance world, my premium is extremely low at just $ 25 a month. I hardly ever notice that funds automatically flow out of my bank account every month. Locking in such a good rate means I’ll only pay $ 6,000 over the course of the 20-year term.
Another reason I was able to lock in such a low premium is because I opted for exam-free life insurance, also known as accelerated underwriting.
When I worked as a life insurance agent, I really enjoyed doing research and building relationships with insurers and helping clients find the best policy terms for their needs.
This also helped me to learn about expedited underwriting, which is when an insurer does not require a thorough medical examination in order to obtain a policy. This means that no one has to come to your home to check your height and weight, get blood, etc. Usually, you only answer a few basic health questions when applying online and instead of waiting weeks to get an insurance policy, you can have one on the same day.
Even though I don’t have any major health issues, the fact that my BMI is a bit higher and my blood test results weren’t always perfectly normal tells me that I have probably saved on the premium by forgoing medical examination and getting life insurance online via Bestow.
3. I can easily change my payee if I ever need it
Naming a beneficiary is one of the most important aspects of a life insurance policy, as this determines who the money goes to. Some people make the mistake of naming their child as a beneficiary or even splitting the 50/50 life insurance death benefit between the child and a partner.
A few years ago, I learned that naming a child as your beneficiary doesn’t actually mean he gets the money. Under the Uniform Transfers to Minors Act, minors can accept cash gifts and even inherit a life insurance payment. However, they cannot actually use or manage the money on their own until they reach a state-specified age (usually 18).
In the meantime, the state should appoint a custodian or guardian to handle the money for them until they get older. The court makes this decision on its own, but tries to find a relative or other suitable guardian.
I don’t want my loved ones to go through this whole process when I know my husband would make the best financial decisions for our child and raise him with care. So, I named my husband as the sole beneficiary of my life insurance and added another person I trust as a secondary option if my husband is not available to do so.
Fortunately, I can change my payees at any time if anything changes, but I’m very happy with the way it’s set up now.
For me, life insurance is about peace of mind and taking responsibility for my family’s future, even if I’m not there. I intend to live a long and full life and I don’t need this policy, but to have it does help me sleep more peacefully at night.