Low-Income Parents Can Get Free Life Insurance for Their Kids’ College Expenses

Posts Tagged ‘Life Insurance’

Low-Income Parents Can Get Free Life Insurance for Their Kids’ College Expenses

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All parents worry about their children — about their personal happiness, providing a good education for them, and of course, about their financial futures. For low-income parents, and single parents in particular, financial worries can loom especially large.

That’s why I was pleasantly surprised to recently come across an offer for free life insurance for parents earning $40,000 or less who also have children under the age of 18. The life insurance offered is a $50,000 term-life insurance policy, and it covers the higher education expenses of your kids in the event of your death. If you die, the $50,000 gets paid directly to the school your kid is attending to pay for things like tuition, books, fees and educational supplies.

I know, I know. It sounds too good to be true. But it isn’t. This offer comes compliments of a well-known and respected mutual life insurance company, MassMutual, which has been around for 160 years and is based in Springfield, Mass. So far, more than 11,500 people nationwide have received $575 million worth of free life insurance as part of MassMutual’s LifeBridge Free Life Insurance Program.

Here’s how it works.

Under the program, MassMutual pays all the insurance premiums for a $50,000, 10-year term life insurance policy. That insurance policy gets issued to a trust at no cost to the insured individual. But if an insured parent or legal guardian passes away while the policy is in force, the trust pays $50,000 in educational costs for the deceased person’s children. And your children have up to 10 years after your death, or until age 35 (whichever is later) to use this educational benefit.

To qualify for the insurance, you have to meet these criteria:

-You must be between the ages of 19 and 42.
-You must be the parent or legal guardian of one or more dependent children under the age of 18.
-You must be a permanent, legal U.S. resident
-You must be employed full or part time and earn between $10,000 and $40,000 annually.
-You must be the only parent or legal guardian in your household who has applied for the insurance
-You must be in good health as determined by MassMutual’s underwriting guidelines.

Read the rest of Low-Income Parents Can Get Free Life Insurance for Their Kids’ College Expenses on BlackVoices

More Than Half of U.S. Households Lack Life Insurance: Survey

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Author: The Money Coach

By Lynnette Khalfani-Cox, The Money Coach

More than half of all American households don’t have life insurance, potentially jeopardizing millions of families’ financial security in the event of a loved one’s death.

According to a survey from LIMRA, a financial services industry group, the percentage of U.S. households with life insurance coverage stands at the lowest level in 50 years. LIMRA reports that only 44% of U.S. households own an individual life insurance policy, which gives a cash payout to one’s beneficiaries when a policy holder dies.

Unfortunately, the recent economic recession has taken a toll on family budgets, and life insurance is one item that’s been sacrificed as people struggle to make house payments, keep up with medical bills or pay credit cards and other debts.

Read the rest of this article on WalletPop

‘Standing on Shaky Ground’ report finds Americans deeply affected by economic tremors (askamoneyexpert.com)
All-Cash Home Purchases: Looking Behind the Numbers (askamoneyexpert.com)
Fewer Americans buy life insurance (usatoday.com)

Is it a Good Idea to Pay Extra on My Mortgage for an Early Payoff?

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Author: The Money Coach

Q: Is it a Good Idea to Pay Extra on My Mortgage for an Early Payoff? How Much Do You Advise to Put Every Month to Pay a $300,000 Mortgage Down in 10 Years?

A: If you can afford to do it, yes, it is a good idea to pay extra toward your mortgage and pay your house off early. The one caveat I would say, however, is to make sure that you’ve taken care of what I call “the financial basics” first. This means paying off excessive credit card debt, having at least a three month cash cushion set aside for emergencies, creating a will, and protecting yourself with both life and disability insurance. Once those things are taken care of, by all means, start throwing extra money at your monthly house note to own your home free and clear as soon as possible.

Paying Down a $300,000 Mortgage

You asked about paying “down” a $300,000 mortgage, and I assume you meant just that – paying a big chunk of it down, and not paying it completely off. If you acquired your home anywhere from 1 to 10 years ago, and got your standard 30-year mortgage, paying it off in just 10 more years would mean you’d likely have to nearly double your current payments. On the other hand, if you’ve owned the home for some time, and want to accelerate your payments so that you can, indeed, have it paid off entirely in 10 years, then that may be financially doable without such a huge increase in payments. One big variable in all this is also the interest rate on your home loan. Since I don’t know how any others facts outside of the payoff amount – $300,000 – and your desired time frame (10 years), I’ll briefly describe two payment options, and then point you in the right direction for further information, where you can run multiple scenarios based on your exact circumstances.

Mortgage Payments are Always Front-Loaded

According to Bankrate.com, to pay off in 10 years a $300,000, 6% home loan means your monthly payments would need to total $3,331. By comparison, a 30-year mortgage, also for $300,000 at 6%, would have payments of $1,799. But remember, mortgage payments are very front-loaded, so that you pay more in interest charges in the early years, as opposed to paying down the principal on the loan. In fact, after 10 years of paying on a 30-year mortgage, you’re likely to have knocked off just 13% to 17% of your principal balance. It typically takes about 17 to 19 years of paying a mortgage before your payments start being mostly applied to principal instead of interest.

Use Online Mortgage Calculator

Use this mortgage calculator on Bankrate.com: http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx.

It will allow you to play around with different payoff scenarios for your mortgage. By doing so, you’ll see how many tens of thousands of dollars you can save by applying extra payments to your mortgage, and paying it off sooner rather than later.

Should I Take a Loan From My Whole Life Insurance to Pay Off My Debt?

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Author: The Money Coach

Q: I Owe $15,000 in Credit Card Debt, all on 1 Card. I Just Switched to 1 Credit Card With a 2.99% Rate Until May 2011. The Contract on My Job is Ending Soon. Should I Take a Loan From My Whole Life Insurance to Pay Off My Debt?

A: If it was just a matter of evaluating the wisdom of using your life insurance to pay off your charge card debt, I would be inclined to tell you that it would probably be a smart move. However, there is a big wrinkle in the whole equation: namely, you stated that your job is ending soon. Normally, I would have counseled you to seriously consider paying off the debt quickly while you can – especially since taking a loan from your whole life insurance policy should have no tax consequences to you. However, the bigger issue is your looming unemployment status.

Use Insurance as a Cash Cushion in the Future

If you don’t find another job or a replacement contract, you will have to consider how you will pay all your normal monthly obligations – housing, food, utilities, transportation, and so forth. I assume you have little to no savings (or some of that likely would have paid the debt already). Unfortunately, it is taking people longer than ever to find jobs. And with 10% unemployment, 1 out of 3 job-hunters has joined the ranks of the “long-term unemployed.” This means they have been out of work for at least six months. So given the current economic environment, and the fact that your credit card debt is carrying an extremely low interest rate right now, I would suggest continuing to pay on that debt as aggressively as you can, but don’t yet tap the cash value of your whole life insurance policy. Keep it untouched for now, as a standby cash cushion that you can access in the future if things get especially tight and you can’t easily replace your income.

Ask The Money Coach

Posts Tagged ‘Life Insurance’