PERSONAL FINANCIAL MANAGEMENT: TOP 5 Questions-#4: Should I buy life insurance and if so what kind and how much?

The fourth question (of the TOP 5) from my recent lecture at Wheaton College that I will discuss is:

Question #4: Should I buy life insurance and if so what kind and how much?

Answers:
Should I buy life insurance: Maybe
What kind: Term
How much: Must be calculated

As a soldier, you are eligible for Soldier’s Group Life Insurance (SGLI) with a benefit ranging from $50,000 to $400,000. Also, you can purchase $100,000 of insurance on your spouse with a monthly premium of $6.50. For more detailed information log on to:

http://www.insurance.va.gov/sglisite/sgli/sgli.htm

Quick Summary: SGLI is a program of low cost group term life insurance for service members on active duty, ready reservists, members of the National Guard, cadets and midshipmen of the four service academies, and members of the Reserve Officer Training Corps.

How Much Coverage is Available? SGLI coverage is available in $50,000 increments up to the maximum of $400,000.

How Much Does SGLI Cost? SGLI premiums are currently $.065 per $1,000 of insurance, regardless of the member's age. See below for a table of SGLI premium rates at different coverage levels.

Current SGLI Premium Rate(Effective July 1, 2008)
Coverage Amount Monthly Premium
50,000 $4.25
100,000 $7.50
150,000 $14.00
250,000 $17.25
300,000 $20.50
350,000 $23.75
400,000 $27.00

How Much Life Insurance do I Really Need? To assess your life insurance needs, follow the link provided on the above mentioned website. For a fast, rule-of-thumb amount: Annual Income X 10 = $ Life insurance need

If you are single with no children you only need enough life insurance to cover the debts that will not be forgiven at your death plus burial expenses.

If you are married or single with children, there are more items to consider. Such as debt, college education expenses, income replacement for surviving spouse, and funeral expenses. It is important to meet with a trusted insurance agent to determine your life insurance need.

TWO THINGS TO REMEMBER:
1. Do not buy more insurance than you need
2. Buy term insurance, this is NOT a long-term investment

Wishing you great Financial Succe$$,

BILL

"Steady plodding brings prosperity; hasty speculation brings poverty" (Proverbs 21:5)