Want to live a horror movie? Just imagine you suffer a terrible accident--maybe in a car, perhaps a freak deal where a surfboard collides at full speed with your head--that leaves you not all there mentally. Sound grim? It could get a lot worse if you don't have disability insurance, which puts real money in your pocket to supplement the scant pennies Social Security gives the disabled.
Here's another bad scene: Just as your business is taking off, you die. Don't say it can't happen. It does, and lots of people can be left holding an empty bag. Do you have a spouse or significant other? Did anybody co-sign loans to help you start your business--maybe a parent, a cousin, a buddy from school? Check out, and they may be obligated to foot the payments on your loans.
There are simple and cheap steps you can take to prevent these horror movies from becoming reality. How cheap? In a quick Internet search, we swiftly found $1 million in term-life coverage for a 28-year-old nonsmoking woman for $320 per year--less than $1 per day. A 28 year-old male's policy cost $400. Not bad, huh?
Read on, and the arguments for buying at least some life and disability insurance get even stronger.
How much is enough? There's no pat answer, but a good way to come up with your baseline numbers is by doing some quick calculations on the Web:
- " Analysis of Your Life Insurance Needs " offers handy tools that offer the two chief methods--income replacement and needs fulfillment--of estimating life-insurance levels.
- " Life Insurance Needs Calculator " is simple: Just click on "How much life insurance do you need?" and you're transported to a spiffy and detailed calculation tool.
- Download a free spreadsheet (available for Excel, Lotus or Quattro)
- Calculating required disability insurance coverage levels is even trickier, but get your thinking started by reading " How Disability Insurance Works "
Curious about how many more years you're good for? Find out by playing The Longevity Game , which asks you a handful of questions, then provides the scientific best guess for the number of years you've got left. Created by insurer Northwestern Mutual Life, this game hinges on the same tools used by actuaries in setting rates.
Buying insurance may not be as fun as calculating your life expectancy, but at least the Internet makes it fast and painless. Plentiful Web sites are proliferating where comparison shopping can be done with just a few keystrokes and mouse clicks.
- InsWeb : This site is easy to navigate, and it offers lots of information on term-life policies for sale.
- Quotesmith : This top-rated site offers instant, online quotes from up to 500 insurers nationwide.
- InsuranceCompany.com : Fill out the worksheet and you'll get a fast quote for disability coverage.
Here's another idea: If you attended college, ask your alumni association if it offers group life and disability policies. Many do, and because these are group-based, premiums can be just pennies. These policies often aren't the most comprehensive, but if you want bare-bones coverage on the cheap, alumni associations can offer the best deals around.
Read All About It
Face it: Insurance raises tough questions that deserve full answers. For the information you need, try these books on for size:
- The Complete Idiot's Guide to Buying Insurance and Annuities by Brian H. Breuel (Alpha Books, $16.95, 800-223-2336): Thick and thorough, this book walks you through all the steps involved in sorting through the many life-insurance options and making the buy that best suits your needs.
- How To Insure Your Income: A Step-by-Step Guide to Buying the Coverage You Need at Prices You Can Afford by the Silver Lake Editors (Silver Lake Publishing, $12.95, 888-663-3091): Still confused about the ins and outs of disability insurance? Read this book and you won't be. This consumer-friendly guide can answer all your questions regarding this little-understood but much-needed coverage.
Robert McGarvey ( firstname.lastname@example.org ) says really cheap life and disability insurance, like the kind he buys through his college alumni association, are essential for grumpy writers.