So, after a couple got themselves a house (i.e. mortgage). Is it a good idea to get a life insurance on both partners just in case sometime happens to one of them, so that the other one won't get screwed and ended up staying in a house with payment (maybe plus payment for kids too) that one income can't afford?

Can somebody explain what kind of life insurance is out there?

thanks

 

With such basic questions you should either do more homework yourself or seek a professional in person. To answer your question thoroughly would be a lot of work because it's so broad.

In general, you don't need life insurance unless you have dependents. If both individuals are working, it's probably more rational to just get a smaller house if one were to die. If there are kids involved that's a different story and much more complicated; you'd be at least as concerned with college/health insurance/etc. for the kids as you would mortgage payments.

 

I think it all depends on an individual's circumstances. I'd think a married couple would want both spouses to be insured, regardless of whether or not they owned a home with a mortgage. At the very least, you'd want insurance to help cover funeral/burial costs. What if the 'departing' spouse had left a bunch of medical bills due to illness or injury before they died? You'd need some life insurance to cover that. After that, you just need to analyze your financial situation and see what would be needed.

 

You need to talk to a financial adviser. It would take a full examination of the couple's situation to know if it makes sense and how much coverage if any is best.

 

The most popular are....

Term Life
Whole Life
Universal Life

Term life is super cheap and is the best bet for those who need a lot on a budget

Whole Life is great because is doubles as a savings account. Say you live to be 80 and never use your $1,000,000 policy. You can cash it out for about 75% and have a nice retirement just on you Life policy alone

Universal life is complex and is more for an investment than protection. Ask a financial advisor to explain

How much do you need? Take 100% of your debts and 6x your annual income. This is the minimum you should purchase.

 

While this is a money and investing area, there is more to life insurance then just money. Sure the economical thing to do if your spouse died would be to down size your house, but in the real world that is much easier said then done, especially if you've been at your house for a long time. Want a real world example, sure no problem.

My father died this past may 30th at the age of 58 with no warnings and in good shape. My mother could have easily gone to a much smaller house and continued to work as she does now without much problems. Luckily my Dad was a plan for the worst and hope for the best kind of guy, so he had life insurance allowing her to keep the home that they had build with their own hands over the last 30+ years they have lived there. My mother is a lot tougher then most, but had she not been able to keep her house I am not sure even she could bear all that stress and emotion.

If you have kids (or plan to soon) then there is no question, unless you are well off enough to have enough money aside to take care of them if one of you were to die, then life insurance is a must.

This is of course all IMHO and heavily influenced by the recent events in my life and my own observations on this subject.

 

This is the right answer. Talk to a financial adviser who covers all areas of financial planning, not a life insurance agent in sheep's clothing.

 

Yes, because the financial planner is oh so much different. Financial planners don't plan your finances, they sell you financial instruments. In this case the financial instrument is life insurance. Whether you buy it from a life insurance salesman, the internet, or a financial planner is of little consequence. I'd suggest the internet. Your chances of finding objective information are far more likely than from a salesman.

 

What you do is find a financial planner that charges a % fee based on the worth of your portfolio. That way he/she is vested to ensure he/she is doing right by you in making recommendations. They make more money the more money you make and lose accordingly based on your portfolio.

In this instance there are no fees given to the planner for buy/sell, etc. and they would be less inclined to try to "sell" you.

Look around and trust your gut. If something doesn't smell right...it isn't. There are reputable people out there.

 

Who are you going to find on the "internet" for free who is going to be qualified to do the calculation to determine how much insurance to buy?