Ryan Brady
speaker
41 appearances
1 recordings
1 series
first heard Nov 2024
last heard Nov 2024
Ryan Brady’s voice in public audio — every appearance, attributed to the second.
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Life insurance is basically a safety net for anyone who depends on you financially. So if you die unexpectedly, life insurance provides money that could replace your income, pay off a mortgage, pay for your kid's college tuition, or really any other expense you want to cover.
It can also give your loved ones the funds to cover your own funeral and burial costs without them having to dip into their own savings. And that can be a chunk of change, right? Yeah, it could be a lot. I believe the current estimate for funeral and burial costs is close to $8,000. Wow. Wow. So you typically you don't buy life insurance for your own benefit. You buy it for the benefit of others.
So if you think about it, you know, our ability to earn income is really our greatest asset, at least for most of us. So we insure that asset through life insurance. That way, our loved ones can maintain their standard of living with hopefully minimal disruption. Of course, there are other reasons why some people buy life insurance, like for investing or estate planning purposes.
But generally, it's best to think of life insurance as a way to replace your income if you pass away. Now, when it comes to your job, most employers in the U.S. offer a limited amount of life insurance for employees as part of workplace benefits. This coverage is usually what's known as basic group life insurance, and it's actually pretty easy to get.
To opt in, all you typically have to do is fill out a form and maybe meet any eligibility requirements that your company has, such as working a minimum amount of hours per week. You also need to name a beneficiary, and that's going to be the person or it can be an entity like a charity to whom you want the payout from your life insurance to go when you die.
And you can actually name multiple beneficiaries and update beneficiaries as your life circumstances change. So there's a lot of flexibility there.
So ideally, you should really be thinking about getting life insurance when anyone depends on you financially. For some people, that could be kind of more in the beginning of their career. For others, it may be more in the middle. But really, everyone's situation is going to be different. So it really just depends.
I'll say that for a lot of people, the need for life insurance comes up when they get married or when they start a family. And Liz, this conversation is pretty well timed because personally speaking, I just bought life insurance myself about a month ago.
Yep, yep. We have a baby on the way. Yay! Yeah, yeah. So in about four weeks, baby Colin's going to be here. So I thought, what better time than to get life insurance? Kind of got me thinking about it. If I get flattened by a bus tomorrow, let's say, would my wife be able to pay the mortgage, pay for the groceries, pay for college expenses or something down the road, all on one income? Right.
And so the answer to that's probably not very easily. So I bit the bullet. You know, I wish I would have done it a little bit sooner, but I'm glad to have gotten life insurance.
Exactly. That's a great point. And also the need for life insurance becomes greater as you take on more debt and other responsibilities, like you mentioned, Liz, especially if you share those responsibilities with somebody else. But even if you don't have any big shared responsibilities today, you may still need to think about getting life insurance if you're planning to in the future.
Let's say if you want to buy a house or start a family down the road. And that's because life insurance is generally cheaper the younger and healthier you are. So it may be wise to lock in a policy now while you still qualify for those lower rates. And of course, you could always buy more life insurance later if you end up needing it. It just might be a little bit more pricey.
One last thing I'll say here is that a lot of people think life insurance is expensive, and sometimes it is. But if you're relatively young and healthy, life insurance can be surprisingly affordable. According to Neuwald's analysis of life insurance rates, the average cost of a 20-year term insurance policy with a $500,000 payout is less than $20 a month for a healthy 30-year-old.
Yeah, you're right. When it comes to basic group life insurance, most employers do offer it as a job perk, and it's usually free. So there's a good chance you already have some life insurance coverage through work if you've opted in. And unlike many individual policies, you generally don't have to take a medical exam or fill out a questionnaire.
The amount of coverage, though, is usually pretty low. Basic group life insurance is often capped at about one to two times your annual salary. So if you're making $50,000, you might have $50,000 or $100,000 of coverage.
That's a good question. I'd say for some people, it may be enough, especially if you're single, you don't have any dependents or any big shared debt obligations like a mortgage. You know, maybe group life insurance is all you need for now. But I'd say for a lot of people, it probably won't cut it. That's why a lot of employers allow you to pay for more coverage through the group plan.
They call this supplemental or voluntary group life insurance, and it's used to supplement or add to your basic group coverage amount. You can typically opt in for this extra coverage when you start a new job or during open enrollment.
And because supplemental coverage is based on group rates, it can be less expensive than getting your own policy, especially if you're older or less healthy than most of your coworkers. As far as how much of it you can buy, I'd say the amount of supplemental life insurance you can get varies by company, but it generally maxes out at about $500,000.
And when you tally up all the life insurance you have between your basic and supplemental group policies, that might be enough for a lot of people. If you're not sure how much life insurance you need, a general rule of thumb you'll hear is to buy coverage equal to 10 times your annual income. But I'd say that's a pretty crude estimate.
And there's actually a lot that goes into figuring out your life insurance needs. So I'll just give a quick plug that Neuroball actually has a really great calculator that helps people figure out how much life insurance they need. So I encourage listeners to try that out if they're curious.
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