Financial Planning for Generation X & Y Women
 
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Expert Q&A Archive

12/11/2009
How much life insurance to purchase when single and in the military?
My question has to do with how much life insurance to purchase. I am a 29-year-old man and I am presently unmarried without children. I have life insurance on my job and also with the military. I feel I should purchase private life insurance in case I lose the job or am no longer in the military. Can you tell me the amount I should purchase or what the approximate cost should be?
Gary Silverman, CFP®:
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You will get answers all over the board to this one. IMHO, you get life insurance if you will leave a financial burden to someone you care about it you die. In your case your wife will be okay, since you don't have one. You don't need to worry about covering your kids' college, since you don't have any. How about your parents? Are they financially secure or will they be depending on you later in life to help them? If so, you will need to calculate how much money that would take. Otherwise, you may not actually have a need for life insurance.
Kris Freeberg:
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To answer this question, you need to determine who your beneficiaries would be, and what needs you'd like them to afford with the life insurance proceeds.
Jeff Kyle:
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Interesting situation...since this is through Wi$eUp Women! You are SMART to be considering OWNING your own policy! A rule of thumb is 15 to 20 times your income! Things to consider in your decision on how much to get should be:

1. State of your current health. If you are super healthy, buy as much as you can reasonably afford, because you may not qualify in the future for additional coverage.
2. Do you have a mortgage or any consumer debt?
3. Might you get married in the future? Having adequate life insurance now shows forethought for your future spouse!
4. Might you have children in the future? They are expensive and providing for them in your place is one of the many functions of life insurance. Also, leaving them a legacy may be important to you! Paying for college or funding a business venture.
5. Life insurance can create wealth where there may not already be any!
6. For now, death benefit is tax-free and escapes probate!

As for cost, too many factors to responsibly throw out a number to you! Do you want term or permanent? Are you a smoker or not? Do you have any health challenges or history of familial illnesses? How's your driving record? Have you had any bankruptcies? Do you participate in any "thrill seeking" type of activities? If term, do you want 5, 10, 15, 20 or 30-year? What do you want for the death benefit? As you can see, there's an awful lot involved even in figuring an accurate quote!

**Find a local NAIFA (National Association of Insurance & Financial Advisors) member and talk to them. All NAIFA members are to operate by a strict Code of Ethics that is the highest in our profession! Best to you!
Joan Koonce, Ph.D:
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The primary purpose of life insurance is to provide for those who are financially dependent on you in the event of your premature death (dying while you have others you need to support). If you don't have anyone who is financially dependent on you, then you don't need life insurance. If you do have someone who is financially dependent on you, then the amount needed is based on many factors, such as income needs of the person(s) you support, how long they will need to be supported, your debt obligations, education expenses of those you support, etc. It is difficult to determine how much life insurance a person needs without knowing their situation. Also, there are some types of life insurance that people buy for investment purposes. Buying life insurance for investment purposes may be a good idea for some, but not others. There are a lot of factors to take into consideration.
Martina A. Jimenez:
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In order to determine the appropriate amount of coverage, you should consult with a financial adviser. We must get the information that is needed to determine what type of coverage and how much insurance you should have based on your current situation and your present investments. We must conduct a needs- based analysis to give the appropriate answer.
Nancy Granovsky, CFP®:
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You indicate that you are with the military. Servicemembers' Group Life Insurance (SGLI) is a program of low-cost term life insurance that is automatically available to all service members on active duty, active duty for training or inactive duty for training and members of the Reserves. It is automatically activated unless the service member opts out in writing.

If you check http://www.insurance.va.gov/miscellaneous/index.htm you will find excellent resources regarding life insurance. When released from active duty or the Reserves, members who have had SGLI coverage can convert their coverage to Veterans Group Life Insurance (VGLI) or an individual commercial life insurance policy at standard rates without having to provide proof of good health.

Another good resource for you to explore is the National Association of Insurance Commissioners' web page, http://www.naic.org/consumer_military_insurance.htm, which discusses insurance issues for military service members and their families, including life insurance. A useful download is "Life Insurance Information For Military Personnel" (http://www.naic.org/documents/consumer_military_brochure.pdf). NAIC also can connect you to your own state's Department of Insurance who can help resolve insurance-related consumer problems.

[Editor's Note: The Wi$eUp curriculum, which is available on the Wi$eUp Web site, contains a chapter on "Insurance and Risk Management," which discusses different types of insurance, including life insurance. The section on life insurance discusses the two types of life insurance—term and cash value (also called whole life). Members of the general public are welcome to use the Wi$eUp curriculum.]
Delores Lenzy - Jones, CPA, CIA:
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The amount of life insurance would be solely dependent on your needs for those monies for your family.