Smart money: financial fears and do you need life insurance?

Smart money: financial fears and do you need life insurance?

Sean Pyles

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Welcome to NerdWallet’s Smart Money Podcast, where we answer your real money questions.

This week’s episode begins with a discussion overcome our financial fears.

Then we move on to this week’s money question from Elizabeth, who wrote this email: “Hello Nerds. I am currently in the process of finalizing my will, medical power of attorney and other legal documents. This has me wondering if I should purchase health insurance. I am 34 years old, single and in good health. I have no plans to have children, so I feel like I don’t fit the typical life insurance mold. However, if I had to leave as soon as possible, I’d like to leave enough money to cover the rest of my mortgage and any other outstanding debts, I also wouldn’t mind leaving money for my siblings or nieces for their education. Is life insurance a good use of money in my situation? Thank you, Elisabeth.

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Our perspective on financial fears

Many people feel fear, anxiety, and shame when thinking about their finances, but there are strategies and resources that help overcome these difficult emotions. First, identify the aspect or aspects of your financial life that cause you to feel fear or anxiety. Is it retirement? Your son’s college fund? A colossal medical bill? Then, tackle those financial issues head-on. For example, you could start looking for retirement brokers or open a health care savings account. Schedule regular check-ins to gauge your progress and maintain the habit of staying on top of your financial health.

If feelings of fear and shame keep you from taking action, seek professional help. Find a financial therapist through the Financial Therapy Association or contact a credit counselor through the National Foundation for Credit Counseling. If you choose a certified financial planner instead, make sure the CFP you work with is a fee-only fiduciary planner.

Our opinion on life insurance

If you have dependents financially, life insurance may be necessary to secure their future in the event of their death. Beneficiaries can use the payout from a life insurance policy to pay for expenses big and small, from the mortgage to groceries. Group life insurance policies, which are usually offered by an employer, typically pay one to two times your salary. Many people supplement a group life insurance policy with term or permanent life insurance.

The cost of life insurance depends on the amount of coverage you want. Permanent life insurance covers you for the rest of your life and as such is usually much more expensive than term life insurance. Term life insurance only covers you for the duration of the policy you have purchased, such as 15 years. When buying term life insurance, try to choose a policy that covers your specific financial obligations. For example, if you have 17 years left before your home is paid off, consider a 20-year policy. A good rule of thumb: calculate the expenses you’re paying now — as well as how much you expect to pay in the future — and buy a policy that matches that number.

If you don’t have dependents financially but plan to have in the future, it may still be a good idea to get life insurance now. The cost of life insurance is partly based on the age and health of the applicant, so buying a policy when you’re younger can get you a better rate than what you might receive if you buy in five or 10 years.

Our advices

  1. Be proactive: Purchase life insurance if you have financial dependents. The younger you are when you get it, the less you’ll usually pay.
  2. Update if necessary: Review your life insurance coverage with each major change in your life, such as getting married, buying a house or having a child.
  3. Compare the prices: Compare quotes from at least three insurers. Prices may vary, sometimes significantly. Shopping around can save you a lot of money over time.

Do you have a question of money? Text or call us at 901-730-6373. Or you can email us at To listen to previous episodes, head to the podcast homepage.

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