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Life, Disability, & Identity Theft Insurance


I am not a CPA nor am I a financial advisor. The following is just my personal opinion


A. While single:

  1. If you would have a negative net worth if you died (including but not limited to debts not forgiven upon death [i.e. most federal student loans are forgiven upon death], assets, & funeral arrangements, etc.), get a term life insurance plan for slightly above to 50% above the expected difference. Also, make sure that your employer doesn’t already offer a life insurance plan at no cost to you or at a reduced cost to you. Sometimes these are not well-advertised benefits where a small free policy (like $50k) could be a free benefit.  Also, there are certain insurance companies that are much better than others about rewarding those who have a healthy lifestyle so having/developing a healthy lifestyle can mean more than just a longer life and less time at the doctor's office. 

  2. Also, consider ways to expedite your net worth, whether through an excellent deal home purchase especially when combined with programs to reduce home cost on a fixer-upper (how I went from having a negative net worth (not factoring in my existing life insurance) from student loans to positive), conservative spending (such as never acquiring a car through interest accruing financing and only acquiring those with low mileage >5 years old where depreciation rates are reduced), increasing primary income, increasing additional sources of income, allocating a higher percentage for a Roth IRA or Roth 401k (I recommend Vanguard unless you are getting an employer match, and in the case of an employer match, getting the max match and then putting more $ into Vanguard), etc.


B. While married with a working spouse and no dependents (& no plans in the next year for dependents):

Have conservative enough monthly expenses that would be covered by your social security check if you died. For instance, at the time of this writing, my only monthly payments of debt are my federal student loans (forgiven at death) & mortgage so If I died, my mortgage would be paid through my social security benefit to my spouse so she could live there and just pay some extra for utilities and even those aren't too high due to the systems and house. Also if my wife preferred to move somewhere else she could have a strong positive cash flow investment property with the house.


C. While married with dependents or with desire for dependents in next year:

Here is one of the strongest cases for life insurance until your assets, passive income streams, paid off housing (or low payments following a refi calculated out & going rates checked at least annually), wouldn't be enough to cover your expenses if you died or became disabled.

In all cases above, have good identity theft protection at no cost with a no annual fee World Elite Mastercard, like a high credit limit (low credit limit cards are typically not World Elite unless combined with another high credit limit card with the same bank) Citi Double Cash.

If you have a 6-month emergency fund in savings or the ability to borrow that much from your 401K/IRA without penalty, there isn't a great need for short term disability coverage, but if your savings and other liquid capital in an emergency couldn't cover you until social security disability kicked in, that's a good idea as well. If your disability coverage exceeds the monthly expenses you would have while disabled, especially by a large margin to factor in increased uncovered medical expenses, you might not want to get long term disability coverage, but otherwise, it's something to consider.

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