(This is part of a series introducing the new personal finance guide for missionaries: Money for Missionaries: A Personal Finance Primer for Missionaries, aka M4M, now available from Amazon.)
There is lots to say about life insurance, but as a missionary, there is one thing you must know now.
Get Life Insurance as soon as possible.
If you will be living overseas, your life insurance policy may be much more expensive, or you may not be able to buy life insurance.
Your missions agency may offer some minimal life insurance, but it probably is not enough. It’s probably enough to get you buried, but it won’t be enough to keep your loved ones on their feet financially after you pass.
To buy life insurance, I recommend term life insurance only. Instead of arguing why, I just want you to get some life insurance, and get started on it right away.
The kicker with most insurance companies is that they will ask you if you plan on living overseas within the next year. If you know the answer is yes, then they may not sell you a policy, or they may make it much more expensive. (Obviously, don’t lie … duh.)
That’s why you should get started on this right away. If you will be raising support and doing trainings, and can honestly say that you do not plan or intend to leave the country for one year, you should be able to get adequate and affordable life insurance.
How much term life insurance do you need?
Don’t use a complicated formula. Instead, figure out how long you want your spouse and dependents to live without worrying about how to pay the bills in case you die.
Or, if you want to be really easygoing about it, just buy a 20 or a 30 year policy for $500,000.
Depending on you and your parents’ health history, this may cost you about $20-$40 per month. Usually, if you pay upfront for the whole year automatically, you can get a better deal (and it’s less hassle).
Which company should you use?
Dave Ramsey recommends Zander insurance. (NOT an affiliate link.)
Any other major life insurance company (Northwestern, Met, etc…) will be eager to give you a quote. But beware: they will push and try to sell something other than a term life policy. Other policies (whole life, universal, etc.) earn them much larger commissions than a term life policy.
Here’s the main argument as to why you should avoid all life insurance policies other than term life insurance policies (and no math is involved!):
The only financial professionals who ever recommend life insurance policies other than term life are those who make a commission off of other types of policies.
There is only one exception to this: sometimes universal life policies can make sense for tax purposes if you are incredibly wealthy.
What if you do plan on leaving the country within a year?
Did an insurance company outright reject you? Did they give you a high quote?
Try an insurance company that specializes in ex-pats or even missionaries.
You will probably have to call them. You will probably pay more for less coverage, but in the meantime, it will better protect your loved ones than what you have now.
If you plan on coming home for a home assignment of one year, plan on applying for a term life policy the minute you get off the plane when you come home for your home assignment.
This way, you can honestly say you do not plan on leaving the country for a year. You can get better coverage for a lower price. Once your new policy is in place, cancel the old one – but not until the new one is in place!
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