Debt and Life Insurance1:41 PM
One of the topics in Dave Ramsey's Financial Peace University is about insurance. Specifically life insurance. Dave has some pretty strong feelings on life insurance and since he is the professional and I have heavily in debt, I'll follow what he says. Dave says get term life insurance for ten times your annual salary and not a cash value plan. A term plan is for just that, a term. A cash value plan is an insurance plan and a savings plan all wrapped into one. However the returns on a cash value insurance plan are horrible.
After the lesson I went home and checked out my life insurance policy. Yep, sure enough I had a small universal life policy. Upon further checking I had actually lost several hundred dollars over the years. I immediately cancelled the policy (which by the way Dave says don't do until you have another policy in place). I just couldn't stand the thought of losing more money.
Dave recommends a company in Nashville (where he is headquartered) to shop for insurance. The company Zander Insurance will look for quotes for all kinds of insurance...life, auto, health, disability, etc. I got on line and got a quote for a term life insurance policy and the original quote was $350 a year. Not a bad amount. I filled out the application and they sent a nurse to do the medical exam. Six weeks later I got the news that due to my type 1 diabetes my insurance rate would instead be $1900 a year (that did include a $50 child policy). WHAT?!?
OK. So they didn't outright deny my application for life insurance. But they certainly made it impossible to afford. It was a very frustrating setback. We are only on baby step one- saving a $1000 baby emergency fund. There is no way at this point in time to spend $1900 a year for life insurance.
And I'm sure as I get older it will only get more expensive.
I will have just to settle for the time being with the life insurance that I have through work. The company has a policy in place in case I die in a fiery plane crash. My family will receive a payment equal to my annual salary. I also took out a supplemental policy through our benefits program. That will have to suffice for now. This getting our debt thing is difficult and I know there will be lots of setback along the way. I just need to learn to take it in stride.