Do I Really Need Life Insurance, and How Much Is Enough?

It's the financial topic that nobody wants to think about, and it forces you to picture a world without you in it. So most people just avoid it entirely.But life insurance might be the single most loving financial decision you ever make for the people you leave behind. So today I want to make it simple. And the avoidance is understandable, but it leaves families exposed. And here's the best part, though.The right answer is simpler and cheaper than most people assume. So stay with me today, and let's take the fear out of this one. Hello and welcome to Financially Confident Christian.I'm Ralph Estep Jr. And I am your host. I'm your guide today. And today we've got a listener question about whether you need life insurance and how much is actually enough.And today's question gets into some real interesting discussions. Person doesn't know if he needs coverage.He's confused by the types and the pitches for coverage and doesn't know how much coverage he actually needs. And underneath of all of that, it forces us to think about hard things. So I can understand avoiding it, but facing it is caring.And that's what we're going to talk about today. Now, if you've got a question for this show, I would love to hear your question. I'd like to share with other people on the show.You can send it to me by going to financiallyconfidentchristian.com/question We'll put a link in the show notes, but again, that's financiallyconfidentchristian.com/question Now here's the question for today.Listener writes this Hi, Ralph, I'm 36. I'm married with two young kids. Now I'm going to stop for a second because as I'm reading this, I'm thinking back. I was exactly where this person is.But anyway, I know I probably should have life insurance, but every time I start looking into it, I get overwhelmed and I give up. There are so many types term whole life universal. And every salesperson tells me something different.Honestly, part of me wonders if I even need it or relatively healthy. But then I think about my wife and kids and what would happen to them financially if something happened to me.And it scares me into realizing I've been avoiding something important. Can you cut through the confusion? Do I really need life insurance and what kind do I need and how do I figure out how much is actually enough?I want to do right by my family without getting talked into something I don't need. Thank you. Well, thank you for sharing a very sincere question. And like I said, in the middle of that, I face this very same question.About the same age you are. And if someone depends on your income, and I want you to hear me loud and clear, if someone depends on your income, life insurance isn't optional.It's protection for the people you love. Now I know that's a bold statement, but you need to hear that from the beginning. If someone's counting on you, this is something you gotta do.But here's the good news. The right kind is simpler and far cheaper than the industry makes it sound. So let's cut through it today. Here's the first thing.Let's decide if you actually need it. Here's the simple test that answers this. Does anyone depend on your income or care? You've already answered it yourself in your question.You've got a spouse and two young kids. I was in the exact same circumstance. My wife was a stay at home mom. I was the only one working. We had two young boys. So check the box.Ralph, you gotta have insurance. If people would struggle financially without you, you need coverage.Now, if no one truly relies on you financially, you might not need much or any of it. But if you're a parent with young kids and working and you need that working income, the answer is clearly yes.So again, if someone depends on you, life insurance is not an option. It's something you got to do and it's for them.But you got to keep it simple because this can get crazy with the different stand on one leg, do this one, do that one. For the vast majority of families.Now this is not going to be the common knowledge you hear from everybody, but for the vast majority of families, term life insurance is the right answer. It's simple. It's the cheapest. You can get coverage for a set period. Like for example, mine was a 20 year level term.You can do 20 years, you can do 30 years. It's a low fixed cost. Now the thing is, it's not going to build up cash value. You're paying for a policy. If you don't use it, that money is lost.Now the difference is whole. Like you mentioned, whole life or universal life. They mix insurance with investing most of the time.Now if you're an insurance person, you're going to send me hate mail. But most of the time, the only person that's serving is the salesperson. So buy simple term coverage.If you want to make an investment, invest the difference in your own investment portfolio. Don't get talked into some complicated product that you don't need. Buy term, keep it simple. And invest the difference.Now, once you've decided, yes, someone counsel me, yes, I need term insurance, then we have to talk about how much do you actually need? So we're going to do the math here. The common guideline is roughly 10 to 12 times your annual income.Now you probably said, whoa, wait a minute, did you just say 10 to 12 times? Yes, that's the real number. Or you got to build it on your real needs. Look at your actual income, look at your mortgage situation.Do you have kids that need education? Do you have a pocket pile of debts? Add all of those things together. The total that you come up with is your honest coverage target.And this is one of those things you don't want to scrimp and save on. You're better to adequately cover than leaving your family short.That number that you decide to buy should reflect the life you'd want them to keep, not just the minimum to pay the bills. Enough coverage is enough to keep your family's life from falling apart without you. Listen, they're going to already be suffering.They're already going to be without you. Think about the gift, the beautiful gift that you can give them. Now here's the next thing. Lock it in while it's cheap.This is one of those things that as you're young, this is a great time to buy term life insurance. It's cheapest when you're young, it's cheapest when you're healthy, which for you and the person that called in here, sent this in.It's the ideal time. Because as with anything, as you get older, the rates are going to go up.Because think about why there's more likelihood you're going to have an illness. There's more likelihood as you get older, you got more time in the rear view than you have in front of you.So a healthy 36 year old can often get substantial term for a very small, modest monthly cost. This isn't one of those things you wait for the perfect time because you got to get this before you need it.And locking in a long term now protects that low rate for decades. That's exactly what I did. I went out and bought a 20 year level term life insurance. And I bought it at a time when I was very healthy.I'm healthy now again. In fact, I'm probably healthier now than I was back then. But you buy life insurance with your health, so spend it while you have it.Now, one more thing I'm going to say, because there's a lot of scoundrels out There selling life insurance that isn't quite as good. So buy from a solid company and move on. Don't get stuck in this paralysis through analysis. Don't leave your family unprotected another year.Get a few quotes from highly rated financially strong insurers, simple level term from reputable company and almost most it'll meet most all families needs. Now listen, once you do that, there's a couple things you got to do. Name the beneficiaries and revisit that every few years.You might have a new child and something might change. But once you do it, set it and forget it. They're covered. So get it in place. Name the people and give yourself peace of mind.Now you said something in your question that I actually faced myself. You said thinking about this scares you because it means picturing a world without you in it.And I understand that because I felt the very same thing. In fact, part of me actually says why don't I worried about them? I'm not going to be around. But planning for your family isn't a lack of faith.A lot of people say, well Ralph, you got to have faith. It's actually an act of love. Because here's what faith doesn't promise us. It doesn't promise us that you're going to have a long life free of loss.It doesn't promise us that tomorrow is guaranteed. And it doesn't promise us the hard thoughts are going to get easy somehow. But it does promise us a couple things.Providing for your family, even for a day you won't see is exactly the kind of love that God calls us to live. Because scripture is direct on this. It says a person who doesn't provide for their household has denied the fate.Now I know that's strong, but that's what it says. That provision isn't only for today. It's planning wisely for those you're responsible for. That coverage is quiet.But it's a profound act of caring for the people God gave you. And you're not betting against God. You're stewarding the family he entrusted to you. So don't fear this decision today.Make it as an act of love, because that's what it truly is. And rest knowing your family is cared for no matter what happens. Friend, facing this isn't morbid. It's one of the most loving things you can do.And the right answer, as I've showed today, is simple. And cheaper than confusion makes it seem that one decision you make this month can protect your family for decades. So here's your win for today.I want you to go calculate your coverage target again. It's about 10 to 12 times your annual income. So if you make $50,000 a year, then generally you want between 500 and $600,000 of insurance.If you've got a big mortgage balance, if you know your kids are going for high education costs, you may need to push that number up a little bit, but that's the number you want to shop with. I'm not telling you to go buy a policy today.I'm just helping you land on the number of what you want because you can't shop wisely until the know you number that you're shopping for well, let's get right to our Bible verse, and this one stings a little bit. I'm going to warn you ahead of time. It's First Timothy, chapter 5, verse 8.It says, but those who don't care for their relatives, especially those in their own household, have denied the true faith. Such people are worse than unbelievers. Like I said, it stings a little bit, but it nails exactly what we're talking about. It frames it perfectly.Providing for your household is a serious matter of faith. Life insurance is a provision extended to a day you might never see here.But caring for your family's future is the heart of what this verse calls us to do. So reframe that thought in your mind today and reframe it from that grim chore into actually an act of faithfulness.How about we pray together right now? Heavenly Father, I bring before you a parent who wants to protect their spouse and their children even from a future they hope never comes.So Lord, I just ask that any of us who are facing this, give us courage to face that with wisdom and to do it well. Lord, help us to cut through that confusion and that sales pressure and give them clarity on what they need, Lord, and discipline to put it in place.Lord, I ask that you will provide affordable coverage while they're young and healthy and replace the fear of this topic with that peace of having protected their family and knowing that. Lord, bless their love for their household as the faithfulness that it truly is. And we ask this in Jesus name, Amen.Like many of us, you came into this discussion feeling overwhelmed and just avoiding it. But I hope today I've given you a simple, clear path life insurance done right is love made practical for the people you'd leave behind.So again, here's my takeaways today. Decide if you need it again.If someone depends on you, you need it keep it simple, choose term, do the math, lock it in while it's cheap, and buy from a solid company. Now, maybe you're facing a financial dilemma or you're dealing with something you could use a little help with. I would love to hear from you.You can leave me a voicemail by going to financiallyconfidentchristian.com/voicemail we'll put a link in the show notes, but again, that's financiallyconfidentchristian.com/voicemail thank you so much for joining me today. Stay financially savvy. May God bless you and you have a truly great. Sam.