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Life Insurance 101: Do You Need It and How Much Does it Cost?
No one likes to think about needing life insurance. But the only way to understand is to, well, understand it. Before you decide that you do or don’t need life insurance, you need to understand what it is, what it costs, and what it could mean for you and your family.
What is life insurance?
Life insurance is a service provided by insurance companies – in exchange for monthly payments, they provide a lump sum payment, known as a death benefit, to the beneficiaries of the person paying when that person passes away. For most people, the beneficiaries would be their family members.
How do I get it?
If you (or your spouse) receive insurance benefits through your workplace, it is likely that there is a life insurance plan available as well. Reach out to your Human Resources department to find out if life insurance is an option for you through your company, and what you need to do to learn more about it. There are also insurance companies that offer life insurance to anyone who qualifies – you do not have to go through the insurance provided by your work.
But wouldn’t using my current insurance provider make it easier?
There are pros and cons to acquiring life insurance through your work. On one hand, it is much more convenient to do a work-sponsored plan, and you will likely get a better rate. On the other hand, that means your life insurance is tied to your job, so if you lose your job for any reason, you would lose those benefits, and potentially have a gap in coverage where you would no longer have life insurance until you found your next job.
What does it cover?
Life insurance, much like your typical medical insurance, can be tailored (to a degree) to fit your needs. For instance, if you have children, you will want to ensure that the payment amount of the death benefit would be sufficient to cover their expenses until other resources are available.
Or if you are about to get married, look for policies that cover things like student loan debts, home expenses, and other daily needs. If you have a family member with special needs who requires medical equipment or therapy, you will want to consider those costs as well.
Can anyone get it?
There are eligibility considerations when it comes to life insurance. The majority of people will qualify for life insurance without an issue. But, just like other types of insurance, there is an underwriting process that takes place to determine your eligibility.
The underwriter will look at things like your health, medical history, family history, lifestyle habits (i.e., smoking, any dangerous activities you undertake regularly, etc.), and you may also need a physical exam before the insurance company makes a final decision. You may learn that you have to pay more than you expected because you are a higher risk to insure, but there is little chance you will not be eligible at all.
Are there different kinds?
There are three different types of life insurance policies that you may have to choose between: term, universal, and whole. The main differences are the longevity of the policy, the flexibility of the policy, and the cost. For instance, term life insurance is designed to cover a specific period in your life, such as the next 20 or 30 years. But it also costs less than a whole life insurance policy, which is more expensive but covers your entire life instead of just the pre-determined time period. Work with your insurance provider to understand all of your options.
Do I really need it?
Again, this is not a pleasant subject for anyone to consider. But it is a necessary one. Only you and your family can determine together if life insurance is the right step; however, we would encourage you to give it some serious thought before making a decision.
It is a financial obligation, and if you have other ways of providing for your family in the unlikely event of your death, you may decide life insurance is not for you. Or if you are worried about how your family would function without your income, you might realize that having this extra insurance policy is worth the extra cost in the long run. It all depends on what you need and what you’ve already planned for your future.
Who can help me understand this better?
When you Google “life insurance,” you will be greeted with a page full of ads, but very little information. Look for resources like this Fidelity website, which breaks down some of the basic questions, or this website that takes you through the underwriting process.
Your best bet is to call the insurance company directly and ask, or, if you are comfortable doing so, talk to a coworker who uses your insurance to see if they are satisfied with the service they receive. Human Resources will also be able to give you additional help and places for research.
5 Best Side Hustles to Earn Extra Money
This year more than most, you may have found yourself getting creative to stretch your budget a little farther than usual. Some extra income would be ideal, but you are not able to take on a job right now in addition to the other responsibilities in your life. But if you could find a source of income that worked with your schedule and skills while also allowing you some breathing room for your budget, wouldn’t you jump at the opportunity? Read on for five great ways to bring in a little extra money each month.
Were you a teacher in a past life? Or, if not, do you feel you have always had a talent for understanding algebra or chemistry? Put those skills to work for you and find some local students who need tutoring. Tutors are needed now more than ever, as many students find they need extra help to navigate learning during this unusual school year.
You can even expand beyond your local community and offer tutoring over a video service like Zoom, or sign up with a program like VIPKid to have a more steady schedule. If you have the time and space, you could also set up a weekly tutoring session for multiple kids in your home or at a local park.
If you have a gift for writing, consider looking into opportunities to do some freelance work. Many websites or magazines are looking for writers who can assist them in creating new content and covering relevant topics for the audience they want to reach.
Websites like Upwork will even help you sort through various opportunities and find which jobs may be a good fit for you. Make a note that Upwork and other similar websites often charge a fee for their services; however, if you can swing the extra funds, the eventual payoff will be much greater.
As much as we wish shopping for shoes or golf clubs could bring in extra money, we are talking about the grocery shopping service, Instacart. This relatively new service has gained a lot of popularity in 2020 as more people opt to do their grocery shopping online. Instacart allows people to pay a personal shopper – which would be you – to help them find the grocery items they need and deliver them to their home. If you are a champion at your local grocery store and are looking for the next challenge to test your skills, this could be your time to shine. Much of this income relies on tips, so if you want to try this out, be prepared to put your best foot forward.
When is the last time you had a yard sale? There are probably a few things around your home that you don’t really need anymore, and selling them could bring in a little extra cash. Shoes, clothes, baby items, books – these are all things that take up a lot of space in your house, even though you don’t use all of them. Get together with a neighbor or two and host a garage sale to not only add to your wallet, but also declutter your home. If you are not a fan of garage sales, take some pictures of the items you want to get rid of and use online selling options, like Facebook Marketplace or Craigslist.
If you have a creative outlet that can benefit someone else, make a plan to sell some of your products! You might be really handy with power tools, or maybe you are always getting comments on your custom-made t-shirts, or people can’t stop raving about your hand-knit scarves – your ability to create could also create an opportunity to bring in some money. Set up a free account for your new business on places like Facebook or Instagram, and let your community know that you are selling some high-quality, one-of-a-kind items.
This is the time to think outside the box – even if you never saw yourself taking a writing job or being a personal grocery shopper, 2020 has taught us to expect the unexpected, and to roll with the changes life brings us. Decide what direction you want to go, make a plan, and see where your new side-hustle takes you.
Five ways to celebrate National Financial Awareness Day
August 14th is National Financial Awareness day—a day dedicated to preparing for your financial future and building financial stability. It’s crucial to take the time to review your finances—sound monetary decisions can make a significant impact in the long run. Today, try to complete one of the items below so you can take control of your finances.
Check your savings
Take a look at your savings account—in the event of an emergency, do you have enough funds to get you through? If not, use today to set goals to ensure you’re saving for the future. Calculate your monthly expenses and develop a plan of action to ensure you have the recommended three to six months’ worth of savings.
Reevaluate your budget
Have you found yourself not sticking to your budget lately? Take the time to reevaluate your spending and make changes where you see fit. Periodically reviewing your budget is a crucial step that is overlooked. Make it a habit to frequently assess your budget and see what should be adjusted.
Brush up on your financial literacy
Financial literacy is key to being confident in the monetary decisions you make, and it can be easy to forget the basics. Take the time today to brush up on your financial literacy. There are dozens of free tools to help, like ACHIEVE, a free financial literacy program from Georgia’s Own. ACHIEVE offers various topics and videos on essentials like owning a home, financial caregiving, planning for retirement, and more.
Take steps to improve your credit
Your credit score is a critical representation of your financial past, present, and future. You need good credit for just about anything, like owning a home, applying for an auto loan, or applying for a credit card—your credit score can even determine the price of your auto insurance. Look at your credit score and see where you can improve. If you don’t know your score, visit the federally authorized site annualcreditreport.com to receive a free copy of your credit report.
Get a head start on taxes
It’s never too early to get a head start on taxes. Begin gathering necessary documents, like receipts, expense records, and donations, then put them in an organized folder, so you have them prepared for when you’re ready to file. Preparing paperwork beforehand will save you time—and sanity—when tax season begins. If you want to take it a step further, you can even organize your tax records from the past few years, so you have those prepared if the IRS ever needs to conduct an audit.
We hope these tips help you take control over your financial future. And, as always, Georgia’s Own is available to help—click here to find more resources to help you make smart monetary decisions.
How to start an emergency fund
As the coronavirus pandemic continues, people have recognized the value of having an emergency fund. People have lost their jobs, faced unexpected hospital visits, and more, leaving some struggling to pay bills. Regardless, it’s still crucial to have funds saved in the event of unforeseen circumstances—26% of Americans have no emergency savings, and only 23% have enough to cover six months’ worth of expenses. Follow these tips to help you get started on your emergency fund, so you’re better prepared for the future.
Track your expenses and spending
Before planning how much you should have in your emergency savings, it’s essential to know your monthly expenses. Calculate how much you spend on your rent or mortgage, utilities, and other necessary items. Tracking your spending is tedious, but there are dozens of budgeting apps, like EveryDollar and Wally, to help you estimate your regular spending.
Set your emergency savings goal
After you’ve gauged how much you spend per month, set your goal of how much you want to save. According to CNBC, less than 30% of households have less than $1,000 saved. That isn’t nearly enough to cover costs in the event of a setback, like a trip to the hospital or unemployment. It’s recommended to have at least three to six months’ worth of expenses saved.
Develop a plan
Once you set your savings goal, it’s time to form a plan of action. Decide what you’re going to do to reach your goal—that could be anything from setting aside a certain amount of money each week to cutting back on unnecessary spending. You can set goals all day, but it’s crucial to know exactly how you’ll reach them—otherwise, it’s easy to fall off track.
Put funds in an accessible place
How you save is extremely important, but where you save is just as critical—if not more. To make the most of your money, put your funds into a high-yield savings account that allows you to easily make transfers between accounts. High-yield savings accounts have higher interest rates than traditional savings accounts—sometimes 20 to 25 times more. While you earn more money in the long run, it’s important to consider factors such as initial deposit or minimum balance requirements and interest rates.
Now that you’ve set your financial goals, how you’ll achieve them, and where you’re going to put your funds, it’s time to start saving. One way to help increase your savings is by setting up automatic transfers—you can set an amount to transfer to your savings each week, every two weeks, or each month. Even if it’s only $50, you’ll be surprised at how quickly your savings will grow. Another great way to increase your savings is by setting aside your tax refund. You can set aside all of it or even just a portion—either way, any amount will help get you that much closer to your goal.
Consider what constitutes an emergency
Now that you’ve started to set funds aside, it’s imperative to decide what constitutes an emergency, so you’re only using your emergency fund for its intended use. This could be unexpected hospital visits, car repairs, job loss, or other unanticipated situations. Defining what you consider an emergency is important so you know your emergency fund is used properly, rather than being spent on frivolous things. Remember, it’s not fun money—it’s money you’re setting aside so you know you and your family will be okay should something happen in the future.
Visit our website to get started on your emergency fund today.
Financial tips to help you survive the pandemic
By: Adam Marlowe
If you’re scared or feeling uncertain about the state of your finances during this pandemic, you are certainly not alone. A recent national poll conducted by NPR’s Marketplace showed 33% of Americans were losing sleep over concerns about their finances and 44% were genuinely concerned about being able to afford groceries and other basic necessities in the coming months. We know many of our members are feeling the same stress and anxiety, so it’s more important than ever to make sure you have accurate and actionable information from financial experts to make the best decisions for you and your family. With that being said, I wanted to share some of the key questions we are getting most frequently from our members, and our best practices to navigate through the choppy waters:
Should I refinance?
While it might seem like a good time to refinance your home or take out a mortgage due to low interest rates, if you don’t have enough liquid funds to pay for the closing costs, you probably shouldn’t focus on it for the time being. If it doesn’t happen now, don’t panic, because this step could certainly make sense down the road.
Is my money safe?
If you feel the need to carry more cash than usual, that’s certainly fine, but there is no need to take out huge sums of money—not only are your deposits federally insured by the NCUA, but your money earns interest while it is with your financial institution, whereas cash in your pocket does not. So not only is your money safer and more secure in a checking or savings account, it’s also more valuable in the long run.
Which bills should I prioritize?
If your bills are piling up and you need to prioritize, make sure to pay your cell phone bill. Between staying connected with your friends and family and having a lifeline to your work remotely, your cell phone is an indispensable tool in our new socially distant world. Many providers are currently offering deferred payment options due to the effects of the pandemic, so be sure to see not only what your cell phone provider is willing to do, but find out what other providers (internet, cable, etc.) are offering to help you manage these challenges.
Can I still afford fun?
Even though disposable income is understandably limited during this time, it’s also important to stay sane and have ways to entertain yourself. In the age of streaming, you can find tons of engaging content on many of these services, so while you might need to cut back on some of your entertainment options, keeping a large streaming service with a deep catalog of content is certainly justifiable.
These are just a handful of topics that we are discussing with our members, but if you have other questions about managing the financial burden presented by this crisis, be sure to reach out to us on Facebook, Twitter, or Instagram. We are here to help!
What to do with your stimulus check
Under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, most tax-filing Americans making less than $75,000 per year are receiving a $1,200 stimulus check—as well as a $500 check for every child under the age of 17. Most people are hopeful for this financial relief—but what should you do once you receive your stimulus check? We have a few suggestions to help you use your check wisely.
Use it for expenses
The primary purpose of this check is to help people survive without a source of steady income. Therefore, one of the best things you can do with your stimulus check is to use it for essentials, like groceries, gas, or other expenses you might have. Like a tax refund, it can be tempting to spend your stimulus check on something nice or new—especially because shopping is at your fingertips right now. However, try to avoid spending your check on unnecessary items.
Put it towards your savings
If you have enough money to get by comfortably, saving your stimulus check could be beneficial. Ideally, you should have at least three to six months’ worth of expenses in your savings account for emergencies. Open a savings account if you don’t have one, and hold onto your stimulus check. You don’t need to set aside the entire check, either—even if you save a portion of it, that’s better than nothing.
Pay off debt
Use your stimulus check towards any debt you may have, such as credit cards or student loans. Even though most lenders are offering deferred payments or forbearance, paying off your debt, if you can, is still the most ideal choice. Anything—no matter how big or small—you put towards your debt gets you that much closer to financial freedom.
Donate it to charity
If you can, donate a portion of your stimulus check to a charity. More than ever, it’s important to stick together and support members of the community. Dozens of charities need help—especially organizations like Action Ministries, that are providing meals for children during the extended school break. Or, organizations, like Meals on Wheels, helping high-risk senior citizens that don’t have access to food. Additionally, many groups are collecting money to help people that are out of work in the restaurant industry. This also means that many scams are escalating. Be sure to research and determine that what you’re donating to is legitimate.
Help small businesses
Lastly, if you’re financially stable, consider helping local businesses. Many small businesses are struggling to stay afloat because of the coronavirus. With social distancing measures in place, many local businesses are changing how they operate or shutting their doors altogether. To help local businesses, consider ordering takeout from your favorite restaurant or purchase a gift card from your local beauty salon to use at a later date.
The COVID-19 stimulus package is a tremendous help for many people, and we hope that these tips will help you make the most out of your stimulus check. If you need further financial assistance, please click here to see how Georgia’s Own is helping members during this time of need.