Kevin McCormally: I am Kevin McCormally of Kiplinger's and I am here Kim Lankford, the Insurance Editor of Kiplinger's Personal Finance Magazine to talk about a lifetime of Life Insurance.
Kim, we know that the people's Life Insurance needs change as they go through life. Let's start out right out of school. When you get out of college, do you need life insurance?
Kim Lankford: You do not actually need life insurance yet. You only need that if someone is depending on you financially, but right out of college you probably do not need it at all.
Kevin McCormally: Okay next step in people's lives, getting married. Do you need it as soon as you get married?
Kim Lankford: As soon as you get married, you might not either. You really only need it if someone is depending on you financially. So if your spouse is depending on you for your mortgage, for example, you might need it, but otherwise not quite yet.
Kevin McCormally: Okay let us step up to the next step, when you have children? Is that when life insurance becomes an absolute necessity?
Kim Lankford: That is the key point. When you have children, your life insurance needs can increase exponentially. Someone who is depending on you financially and you really need to start thinking about coverage.
Kevin McCormally: How do you figure out how much you need?
Kim Lankford: Well a rule of thumb is to consider about eight to ten times your income. But if you want to go into more detail, it great to use a calculator like the one at kiplinger.com that helps you figure out what your cost -- what your expenses will be and then what your family will have as income coming in even if something happens to you, and then to figure out to get enough insurance to fill in those gaps.
Okay Kim, let us say you have got kids at home and either the husband or the wife stays at home to take care of the kids, a non-working spouse, does he or she need insurance?
Kim Lankford: That is a great question. So many people forget to get coverage for a non-working spouse, but if anything were to happen to that person, there would be a lot of vary expensive child care cost. So you really need to think about insurance for that person as well.
Kevin McCormally: Okay, next step, empty nesters; when the kids are out of college, are you done with your need for life insurance?
Kim Lankford: You may be; if you bought the insurance in order to protect your family when you had young kids and have them depending on you, you might be able to drop your coverage after they grow up and leave the house. What you really need to think is, is your spouse depending on your income still? That is the decision to make.
Kevin McCormally: Okay I know how much insurance I need, how do I get a good deal, when I buy it?
Kim Lankford: Well the great thing is for term insurance, which is what most people need, you can go on the web and shop among dozens of companies at two great sites; I like insure.com and accuquote.com. It makes it really easy to compare costs.
Kevin McCormally: Okay, thank you Kim.
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