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This post is sponsored by Ladder (www.ladderlife.com). All opinions expressed are the intellectual property of FinanceSuperhero.com.
When it comes to planning your family’s financial future, there are several critical pieces of the puzzle: a budget, an emergency fund, short-term and long-term savings goals, retirement planning and life insurance.
At FinanceSuperhero, we believe life insurance is often the most neglected phase of financial planning, and we’re on a mission to change that.
Our reasoning is simple: Life rarely goes as planned, so you need to have a backup plan. The sad reality is your entire financial plan could be torn to shreds if you were to die unexpectedly tomorrow.
That’s why we recommend simple term life insurance as the number one way to manage risk and protect your family.
Why You Need Life Insurance
Simply put, you need life insurance if you have a partner, children, or other family members who rely on you for financial or other support. (Don’t forget coverage for stay-at-home partners who care for your children, either.)
A life insurance plan acts as a safety net to cover the financial needs of those who depend upon you if you should pass away. You might think of it as a really big emergency fund.
The only time we do not recommend life insurance is when you have built up enough savings to provide your own safety net for your loved ones. In this case, you are what we call “self-insured.” Unless you are an extremely high income earner, you probably won’t reach this level until you are close to your retirement years.
Why Some People (Foolishly) Think They Don’t Need Life Insurance
We have heard many excuses and objections over the years when it comes to life insurance:
- “It takes too long to get a life insurance policy in place.”
- “If I sign up for life insurance, I’ll be broke after I pay the monthly premiums.”
- “I already have a $10,000 life insurance policy through my employer. That’s enough, right?”
The most concerning part about these statements is that we hear them all the time—even from people who are otherwise very savvy when it comes to planning their finances.
It’s clear to us that many people are confused about life insurance and the role it plays in a sound money plan. And with the growing number of life insurance options available, that’s not surprising.
Let’s clear up some of the confusion surrounding the types of life insurance.
What Type of Life Insurance is Best?
There are more life insurance products and providers available in today’s market than ever before. A majority of them are derivatives of the two most common types of life insurance: whole life and term life.
While a full breakdown of all life insurance products is beyond the scope of this post, we believe term life insurance, rather than whole life insurance, is the best type of life insurance for virtually everyone for a few simple reasons:
- Term life insurance does one thing and it does it very well: it provides a tax-free, lump sum payment to your survivors when you pass away.
- It offers premiums which many people find surprisingly affordable.
- Term life insurance premiums remain the same over time. Unless you increase or decrease your coverage, your monthly payments will not change.
- It protects your family without eating up a sizable portion of your monthly budget, which allows you to continue saving, investing, and enjoying your hard-earned money.
- Term life insurance does NOT pretend to be an investment product like many of its counterparts.
In short, term life insurance is the only life insurance we personally use, and it’s the only one we recommend.
What is Term Life Insurance?
Compared to other life insurance products, term life insurance is the easiest to understand by a long shot. It is designed to allow purchasers to provide their families a guaranteed lump sum cash payout if the purchaser were to pass away at any time during the term of the policy (often 10, 20, or 30 years) by paying affordable monthly premiums.
If you were to pass away during the duration of your policy term, your family receives a tax free payout which they can use toward paying funeral costs, medical bills, outstanding personal debt, and other ongoing cost of living expenses.
The only catch with many term life insurance policies: they expire at the end of the agreed upon term.
If you don’t have a current term life insurance policy in place, we believe this should become your new top priority. Getting initial coverage in place is not something you should overthink or take several weeks to plan out —it is a process you should figure out and commit to before you finish this article.
Again, getting initial life insurance coverage in place is not something you want to delay. You can always review your initial coverage and make changes later, but if something happens to you before you add initial coverage, it’s too late.
And your loved ones will be the ones left to bear the consequences of this oversight.
My Experience In Getting a Term Life Insurance Policy
In the past, getting a term life insurance policy often took several weeks and the process usually involved most of the following steps:
- Contacting your employer or a life insurance agent to discuss your options.
- Completing an application and committing to a specific benefit amount and term duration.
- Submitting to lengthy medical questionnaires as well as blood and urine tests.
- Waiting several weeks for underwriting to make a decision on your file.
This is the process I went through a few years ago when I decided it was time to increase my term insurance coverage. I knew I wanted to secure a policy that I could take with me if I ever chose to leave my employer, so I contacted an independent company.
Everyone who worked with me throughout the process was kind and helpful, and I got my policy in place after two weeks without too much hassle. But on more than one occasion, I thought to myself, “There has to be a better way to do this.”
It turns out I’m not the only one who had those thoughts.
Ladder Offers a Smoother Way to Get Life Insurance
Ladder, an emerging company in the life insurance space, is on a mission to make shopping for life insurance simpler, faster and consumer-friendly.
As we noted earlier, term life insurance policies have historically been “fixed,” meaning that once you set your policy, it can be very time consuming and expensive to change them. They also were (and in some cases still are) heavily tied to commissioned agents and lengthy timelines, leading many people to abandon setting up a policy out of sheer frustration.
Today, Ladder offers a better way to obtain and manage a life insurance policy— one that eliminates unnecessary fees, meets your specific needs, gives you more flexibility, and avoids lengthy delays.
What Makes Ladder Different?
Ladder recognizes that life is constantly changing, so they designed life insurance that is flexible. “Laddering” is their way of putting their customers in control of their coverage costs and amounts over time.
Traditionally, applying for more coverage (or decreasing coverage, in some cases) has usually required lengthy timelines and hours of hassle. Ladder makes it easy to change coverage amounts without extra fees at the simple touch of a button.
If a Ladder customer wants to increase their coverage, they may simply apply for additional coverage in minutes and “ladder up.” Decreasing coverage is a simple process they call “laddering down,” and that can be done with a few clicks on a customer’s account page.
For example, before our son was born, my wife and I decided to double my term policy coverage through the same insurance company I had used to get the original policy. Again, the process took more than 2 weeks, involved several phone calls and an in-home medical exam. If I had known about Ladder at the time, I could have “laddered up” in only 5 minutes.
How to Calculate Your Life Insurance Needs Today
At FinanceSuperhero, we firmly believe the first step in getting life insurance (or changing your existing coverage) is figuring out how much coverage you need. Your needs will change over time following life’s major milestones: marriage, purchasing a home, having children, paying off a mortgage or reaching retirement, to name a few.
There are two simple ways to determine your family’s life insurance needs:
- Choose an amount equal to 10-12 times your annual income, OR
- Use Ladder's Calculator to determine how much life insurance you need
I used Ladder’s Calculator to run a sample scenario for a family with a mortgage, one child, and limited savings and investments. It took me two minutes to fill in the numbers, and Ladder didn’t ask for my personal information in order to see their calculation.
Here are the numbers that I used, and this is the instant calculation I received:
Once you have an idea of how much coverage you want to select, the remainder of the process with Ladder takes approximately 10 minutes:
Step 1: Enter the coverage amount of your choice.
Step 2: Fill out an application – this usually takes about 5 minutes.
Step 3: Get an instant decision in minutes.
Are you ready to explore the process, calculate your life insurance needs, or get a quote? Get started here.
Recap: Why You Should Trust Ladder With Your Life Insurance Needs
In our opinion, Ladder has quickly become a trusted name in life insurance for a big reason: They’re in tune with their customers’ needs and genuinely want to make getting life insurance as easy as possible.
Ladder seems to understand the primary complaints people have about getting life insurance—dealing with sales agents, spending hours on the phone, submitting blood and urine tests and waiting weeks to receive a decision—and they have removed some of the biggest roadblocks and headaches from the process.
If you don’t have life insurance in place, please don’t go another day without a policy in place. Take 10 minutes and get a policy in place right now. It doesn’t take much effort, it won’t disrupt your schedule, and it won’t cost you an arm and a leg. And if you do have a policy in place, we believe you should review your needs and check out available rates at least once per year.
We cannot think of a better way to tell your family you love them than making sure they will be provided for if something happens to you.
Frequently Asked Questions About Ladder
Still have questions about life insurance with Ladder? Here are answers to some of the most common questions:
Is life insurance expensive?
Many people find life insurance is surprisingly affordable—especially term life insurance! Ladder makes it even more affordable by eliminating commissioned brokers who work on commission by paying their employees a salaried wage.
Is Ladder trustworthy?
Ladder is fully licensed and insured by Fidelity Security Life Insurance Company.
Will my life insurance premiums change as I get older and/or my health changes?
With Ladder, your price is locked in when you begin your policy. Your premiums only change if you “ladder” up or down. And with ladder, you never pay extra policy fees, even if you change your policy.
Am I locked into a policy once I get started?
If you’re not happy with your policy, you can always change it by laddering up or down to suit your needs. You can also cancel your policy within the first 30 days and receive a full refund if you’re not happy.
Have more questions? Learn more about Ladder here.