Choosing the right insurance for you and your family


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Portable Level Term Life Insurance 

Each spouse needs to consider what their income needs would be if their current partner were to die unexpectedly.  Generally, I recommend 10x the annual earnings of the person who is being insured.  You want separate policies for each spouse.  Also, don’t rely purely on an employer-sponsored plan for your health insurance.  What happens if you were to develop a terminal illness and then need to quit your job?  Some employer-provided term life insurance policies are portable (meaning that you can continue the policy after you leave if you are willing to pay the full cost of the premiums).  If you have an employer-sponsored policy, find out if it’s portable.  Make sure your policies are LEVEL (your premiums do not go up) and TERM (death benefit only, no investment vehicle). Sites like HealthIQ can help you match you to quotes from several different insurance companies.

Read more: 2 simple websites to shop for life insurance

Disability Insurance 

You are 4x more likely to become disabled during your working lifetime than to die during your working lifetime.  However, few people spend the money for disability insurance.  Disability insurance typically comes in two flavors : Short term and Long term.  As you might expect, the short term provides benefits for you for a short period of absence from work (e.g. 6 weeks) and is not as important if you have a fully-funded, six-month emergency fund.  The Long Term Disability policy generally provides you a paycheck (often between 50% and 66% of your pre-disability income) if you are disabled for a longer period of time (up to the point you can return to work, you retire, or you die). BUY THIS! Sites like PolicyGenius can help match you with a company that provides this insurance.

AVOID Variable Universal Life 

Extremely high fees and commissions for the salesperson.  Awful track record for consumers. Note: Unless you are making over $350K/year in taxable income, you should not be looking at ANY insurance product as an investment.  The supposed tax benefits for everyone below that threshold do NOT work out in your favor.

AVOID Return of Premium Life Insurance 

Again, this is just another way for the insurer to collect more money from you and hope that you opt-out of the policy and they get to keep the extra premiums.  Just get simple LEVEL TERM life insurance.  Nothing more.

AVOID Annuities 

Annuity is a curse word on the Clark Howard Show because they have extremely high fees and commissions for the salesperson, and they are generally awful for the consumer who purchases them.  There are only two types of annuities that are EVER appropriate and they are called ‘Immediate Payout Annuities’ — or ‘Lifetime Annuities.’ You should ONLY consider those options under the careful guidance of an independent, hourly-paid financial advisor from the Garrett Planning Network (See my investing tips for more info).

Amica Mutual Insurance 

Highest rated insurer for customer satisfaction on auto and home insurance.  They aren’t the absolute cheapest, but the point of insurance is to have them step up when you need them.  They are an actual mutual company that works like a co-op and sends me a check at the end of each year that represents my portion of the profit they made.

Read more: Best and worst home insurers

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