Step #5: Do You Have Life Insurance?

While I realize this e-course is about getting you headed down the path towards becoming rich, I know all-to-well that go-getters and self-driven people often overlook important things because we simply “don’t have enough time.” So, while I want to you to be driven, I also want you to take a step back and take care of what’s most important to you: your family.

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Saying that, one of the MOST important things you can do for your family is buying life insurance. Regardless of YOUR opinion on the matter, life insurance is an absolute requirement for most families and you should do everything you can to fit it into your budget.

Shopping and Buying Life Insurance

Now that you’ve shopped your auto/home insurance rates (and hopefully saved a few dollars), worked on cutting the fat off your budget, AND developed some strategies to increase your income, you should have some room in your budget to afford protecting your family.

I’ve written a lot of posts about the importance of life insurance, how it works, and how to go about buying it. So, instead of wasting your time today, head over and check out some of these posts when you have time:

Do You Need Life Insurance?

The most important step is determining whether or not you NEED life insurance. If you have children or a spouse then you likely do. However, if you’re single and are not in a serious relationship, then it’s likely that you don’t.

The determining factor for you (if you’re single) is whether or not you have a lot of debt that has been co-signed for. Understanding that your co-signer will likely be responsible for your debts (or whatever your estate cannot cover), it may be necessary to have a small policy. You may also consider it if you’d (1) like to make sure nobody gets stuck paying your funeral and cemetery bills or (2) if you have a desire to leave money to family or charity.

What Type of Insurance Should You Buy?

There are two main types of life insurance: term and permanent.

Term is often the best place to start and is the one I’d encourage you to get if you don’t currently have life insurance. As the title suggests, the policy is only in force for a temporary period of time (or for a specific term). The great thing about term is that it’s the cheapest insurance you can buy, but once the term is finished then the policy is gone.

For starters, look at 20-year and 30-year term policies.

Secondly, look to get about 10-15 times your annual income. If you don’t have a lot of debt (including a mortgage) then 10x’s your income will suffice. However, if you have children and lots of debt then it doesn’t hurt to add an extra $100k or $200k.

I personally have a 20-year term policy. My goal is to be self-insured by the end of that period of time which means I’d’ have enough assets for my wife to live off of if anything were to happen to me.

If you want to learn more about term life insurance and how it works, then I’d encourage you to check out How Does Life Insurance Work? and What Does Life Insurance Cover?

Is Having it Through Your Employer Enough?

Many employers these days give you life insurance as a part of your employment compensation package (this is not the same as the “supplemental” coverage you may be paying extra for). Knowing that, there are a few things you must consider:

  1. Typically, this life insurance ends when you leave that employer.
  2. Some employers do allow you to “port” your insurance cover (which means you can take it when you leave/get fired), however make sure you verify that with your benefits department as it’s rare.
  3. Most employers’ will give you 1 or 2x’s your salary in life insurance coverage. Well, after reading what I wrote above, that’s obviously not enough. If you find yourself in that situation, then it’s important that you supplement (or add more) coverage and you can do that one of two ways: (1) buy coverage on your own or (2) buy group life insurance if your employer offers that.
  4. If you have the option to buy additional life insurance through your employer, you should still shop rates on your own (through a carrier below or a broker). I did a detailed write-up on the differences between group policies and manually underwritten in this post: How Does Life Insurance Work?, and that should give you some guidance as to whether an individual or group policy will be most suitable for you.

Where Can You Shop Rates?

There are two primary ways to shop for life insurance: (1) by meeting with somebody that works for a captive agency (such as State Farm) or a broker who can shop rates for you between a number of carriers or (2) using an online broker platform that shops the rates for you.

If you’re unsure if term is right for you, or if you want to have somebody give you an opinion on exactly how much life insurance you should carry, then I’d encourage you to find somebody in your local area that can help you.

However, if you’re comfortable looking for 20 or 30-year term quotes on your own, then I’d suggest you use one of the online services below. Each of these companies will ask you a little information and then will shop rates between a number of different carriers. I’d suggest that you use each of them as they have different carriers they offer and by getting as many quotes as possible you’ll ensure you don’t waste money unnecessarily.

1. InsureMe

Their process: they’re first going to ask for your zip code (as rates are dependent upon the state you live in), and then some info on gender, marital status, and height/weight.

After that you’ll go to another screen to enter in the type of insurance (Term), the length of coverage (20 or 30), the amount, and then it asks for “current life insurance company.” That one is a little tricky, but just scroll down about 1/8 of the way and you’ll see “none”. If you do have coverage through somebody, then put the right carrier there.

You’ll then get asked a few quick medical questions, be asked to enter your address, home phone, and email. After that, InsureMe will follow up with you by phone and email to discuss the options they were able to come up with for you.

It took me a total of 10 minutes to fill it all out.

2. AccuQuote

Their process: this online system doesn’t make you go to as many pages and simply what you see on the first page is what you need to fill out. As always in this process (whether you do it online or in person), you’re going to have to provide your personal information. As with InsureMe, AccuQuote is another leader in the online insurance broker market and is a reputable company.

This will take you all of 5 minutes.

What’s Next?

Once you’ve found a rate that works for your budget (and is one of the most competitive that you could find), then you’ll need to follow up with AccuQuote or InsureMe to start the application process.

That again is something that won’t take you too much time. Once the application process is underway, the blood/urine tests will be ordered. I will say, it was strange having somebody come to my house (years ago when my wife and I got term life insurance), but it takes all of 20 minutes and they’re generally very professional.

If you don’t want the person to come to your house, you can also have them meet you someplace else (such as your work).

FYI – the application process and blood/urine stuff is required regardless if you shop online or meet with somebody in your local area. Also, the blood/urine company is somebody totally separate from the insurance carriers/brokers and are simply contracted out.


As you’re working to become rich, it’s easy to push things aside that don’t seem important to you — and things such as life insurance or other important documents (which I’ll discuss next lesson) typically are one of them. My hope is that you’re wise enough to take the time and do what’s necessary to protect your family in the event something tragic happens.

I know I was foolish and didn’t get life insurance the instant my wife and I got married; we actually waited an entire year before I got over my miser mentality and was willing to pay the $80/month premium. Fortunately for the both of us, nothing happened in the time we were uninsured. However, I sleep soundly at night knowing she’s protected in the event something terrible happens. While you may never think it can happen to you, all you need to do is watch the news once-in-awhile to realize just how crazy our world is.

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About the Author

By , on Apr 1, 2013
Andy Tenton
Andy is a 30-something New Yorker who turned his financial life around. He took charge of his finances, got out of debt, and is now working his way toward financial success. He is the publisher of

How to Become Rich e-Course

Budgeting 101


  1. Marc Bautis says:

    Life Insurance is extremely important. The other type of insurance that is important to protect your paycheck is disability insurance. Unlike life insurance, disability insurance is important even if you are not married or have kids. The other thing making disability insurance crucial is that during your working years you are a lot more likely to become disabled than to die.

  2. Kelly says:

    This seems like somewhat of a complicated subject, especially when you have a family to think about as well, but posts like this are really helpful for those who don’t know where to turn for advice. Good tips here and a lot of good information on what to think about and what to consider in terms of insurance that will work best for your personal situation.

  3. Great tips! I am in college and have yet to think about life insurance with all of my bills, car payments, and student loans I have to pay off in my near future but I will have to buy life insurance when the time is right, I don’t understand not having it I feel like it is a necessity!

  4. Great comparison of term/permanent, and thanks for the heads up about Accuquote. Great post.

  5. We went through esurance for our life insurance policies. They are only for $250,000 each, but we don’t have children and that will cover our last remaining debt ($205k mortgage) and funeral costs. Our savings and selling our rent house which is paid off now can be used if either of us need anything else.

  6. Great resources and tips! After having our daughter my wife and I finally got serious and purchased life insurance. I definitely sleep better at night knowing this is there.

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