Episode 10: What to Consider Before Accepting a Job Offer and Do I Really Need Life Insurance?
I’M IN THE MARKET FOR A NEW JOB. WHAT DO I CONSIDER BEFORE SAYING “YES” TO AN OFFER?
DO I REALLY NEED LIFE INSURANCE?
One of the fun parts of being a financial planner is getting to field and answer questions from clients and readers all around the country. In these Work Your Wealth episodes I’ll be taking time to address and answer questions I’ve come across from readers and clients throughout my career. Today I’m answering the above questions.
WHAT YOU’LL LEARN FROM THIS EPISODE:
What to look for in a job offer beyond the salary.
Where to find extra money offered by a potential employer.
Why getting the company benefits booklet up front can save you from a costly mistake.
Who does and doesn’t need life insurance.
The best type of life insurance policy for your situation.
Why it’s not safe to assume family / friends will support or take care of your loved ones.
#YOLO (You Only Live Once) has become a hashtag phenomenon in twitterverse that is often accompanied with some ridiculous behavior. I decided it could use a #responsibleYOLO spin, followed by some solid advice.
Life Insurance is an often ignored and under prioritized need in one’s financial situation. However, it couldn’t be more important to protect your family and I’ve seen the results that not having appropriate insurance can have – even in your 20s and 30s. Ultimately, obtaining the appropriate amount of life insurance is not about you. It’s about your family and making sure they’re protected in case something happened to you. As a GenYer, if you are married and/or have children that are dependent on your income, how would your salary be replaced in the event of your death? Would your spouse be able to maintain the household expenses? What about the mortgage payment? Whether you are the main breadwinner, contributing a portion of the household income or staying at home with the kids, there are contributions you are making, whether financially or in the form of a “value” provided through the activities that you perform, which should be protected. Below are some items to consider when evaluating the amount of life insurance you need:
Income Replacement & Timeframe
How much income would your family need if something were to suddenly happen to you and for what time period? For example, if you’re 30, married, and have a child at home, you may need your life insurance to cover costs until your child is 18 and then until your spouse retired at age 65. This includes amounts they would need to maintain lifestyle and household expenses. Be sure to account for other income sources available such as your spouse’s wages, interest and dividend payments, etc.
Consider the outstanding balances on any mortgages, car loans, student loans and any other types of debt. Total these values and incorporate the number into your life insurance face value. Being able to pay off these balances would decrease the income replacement percentage that your spouse or family would need if they lost your income.
Be sure to consider any amounts that you already have stocked away such as savings accounts and money markets, 401(k)s, IRAs, Roth IRAs, stocks, mutual funds, etc. These are assets that will also grow overtime and help to supplement income needs.
The Value of What You Do
Even though one spouse may stay at home, there is still value provided through activities such as childcare, housekeeping, yard work, and more that would have to be replaced by either the surviving spouse taking over or paying for daycare, gardening or housekeeping services. Be sure to incorporate these expenses into your life insurance needs estimate. Keep in mind that the amount of life insurance you and/or your spouse need will change over time as your situation changes. With family additions, home purchases and upgrades, income level fluctuations and more, the amount of your insurance coverage should be evaluated on an annual basis at a minimum or immediately after a change to your financial situation. Like what you read? Sign up for the Workable Wealth community for more tips and resources and receive 9 Steps to Workable Wealth, a free guide to help you kick start your financial journey.
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