Ladder Life Insurance CEO Jamie Hale says, “Life insurance sits at the intersection of financial savviness and love.”
At 11 years of age, Hale’s father passed away, leaving two sons and a widow. But because his father had planned for such an eventuality, the family didn’t have to fear losing their home or leaving their community.
Insurance tends to have a negative connotation. People often associate it with the worst types of salesmanship. They see the process of purchasing insurance as complicated and tedious. But Ladder is reinventing the way people buy term life insurance, making it simple and effortless.
The whole point of obtaining life insurance should be to protect and provide for the people you love. Ladder wants not only to make this possible but also to facilitate what has traditionally been a vexing task.
Getting a Quote
The company has certainly succeeded at making buying life insurance far more accessible. Getting an anonymous quote on Ladder’s site only takes a minute or two.
At the bottom of the home page, Ladder has a simple form where you can calculate the cost of your premiums based on a few of your physical characteristics and overall health.
When I put in my information, the site determined the price of my monthly premiums based on my health and how many years of insurance I wanted to purchase. I could adjust both the number of years and the amount of money I wanted to provide for my dependents.
As you can see below, purchasing $1 million of life insurance for a period of 20 years would currently cost me $31.46/month. That seems more than affordable to me, and if I had children, I would probably go ahead and purchase it.
Granted, I’m relatively young and in good health. I don’t smoke. So my risk of death for health reasons is low—although none of us truly knows how long we have.
Obviously, the price increases significantly for people in poor health, especially if they are older. I decided to enter info for a man in his late 50s with average health. I also said that he smokes. Not surprisingly, the price went up quite a bit.
The price for such a man to buy $1 million of insurance for 10 years would be $1,013.03/month. Prices for more years than that were unavailable. For the same man to purchase only $250,000 of life insurance for 10 years would cost $279.68/month.
How Much Life Insurance Do You Need?
The Cost of Raising a Child
A few years ago, the U.S. Department of Agriculture projected that for middle income families with children born in 2013, it would cost just under $250,000 to raise a child to age 18. This amount does not take into account inflation (which could raise the number to over $300,000), nor does it consider the expenses of college.
Keep in mind that where you live in the country impacts the cost. Housing is the priciest expense for raising children, and the cost of living varies by region. The South, for example, is one of the least expensive places to live. Education and food are the next highest expenses, respectively.
Income impacts cost of living as well—families with higher incomes spend more on child-rearing. Notably, the more children that parents have, the more the cost per child diminishes.
If you take the time to calculate the expenses your family will have to deal with, you can enter those amounts into Ladder’s calculator to get an estimate of the amount of life insurance you should purchase.
Factors that will impact your premium include any current debts, if you have a mortgage, money you’ve already saved, and any life insurance you’ve already purchased. You’ll need to consider the number and ages of your dependents and whether you want to plan for private school and/or college.
You’ll also need to decide how much you want to set aside per dependent per year and for how many years you want to do so.
What This Might Look Like
Let’s hypothesize that I have two children (at the moment, I am not so fortunate). I entered their ages into Ladder’s calculator as 2 and 4. We’ll say that I’ll pay for a relatively cheaper college for them, $8000/year.
I made the amount of debt I hypothetically have, as well as my hypothetical savings, minimal—I put $5000 for each. I said I had no mortgage and no current life insurance.
I’d like to provide for my fictional children until they’re each able to finish college, so I opted for 20 years of coverage. I planned that it would cost me $300,000 to raise each child since I want to cover them for 20 years, instead of just 18, and I should probably plan for inflation anyway. Plus, it’s an easy, round number.
$300,000 per year for 20 years is $15,000 a year. I put that into the Ladder calculator, along with the other factors I’ve mentioned. All in all, I think it’s a fairly conservative estimate.
With that information, Ladder estimates that I should purchase $400,000 in life insurance. With me being young and healthy, $400,000 for 20 years is only $15.66/month. If I were the man in my previous example, the cost for the same situation would be $411.98/month for 10 years. But the price for that man goes down to $137.83 if he doesn’t smoke.
For another perspective on what amount you should purchase, Dave Ramsey recommends that you get term life insurance for 15-20 years at around 10-12 times your income.
By this standard, someone who makes $40,000/year should purchase $400,000-$500,000 worth of life insurance.
The Many Benefits of Ladder
It used to be that you had to visit an insurance agent to secure your policy and that the process could take weeks or months. But with Ladder you can get a quote and purchase you policy within minutes of visiting the company’s site.
You probably don’t need to purchase life insurance if you’re a young, single person with no dependents unless you want to make sure your parents or siblings are assisted if you’re not around to do it.
If you are married and/or have kids, purchasing life insurance while you are young is highly advisable. As you saw with the previous examples, the premiums were much lower for a younger person.
The price of life insurance simply goes up as people age, even if they are healthy. If you buy life insurance when you are younger, you can secure extremely low premiums for yourself that will remain at that price for as long as you have life insurance through Ladder.
It’s also worth noting that Ladder’s insurance is portable if you switch jobs. If you’ve already purchased life insurance through your job, that’s great. Just keep in mind that with Ladder, you don’t have to worry about losing or changing your insurance if you change employers. You can also adjust your Ladder life insurance as needed (say, if you have children and need to add them to the policy).
Obviously, you might have questions as you go through the buying process. Ladder’s support team is ready to help you with any questions you might have. Just send them an email through the Contact Us page.
Finally, Ladder is securely backed financially. The company recently partnered with Hannover Re, one of the largest reinsurance companies in the world.
Unfortunately, Ladder is currently offering life insurance only in California, although Ladder’s services will eventually be available nationwide.
It’s About Taking Care of Those You Love
We don’t like to think about the fact that we’re going to die one day, and it’s gloomy to plan for that event. But as the team at Ladder likes to point out, love is the motivating force behind the services they provide.
If you’re looking to purchase life insurance and are fortunate enough to live in California, check Ladder out. Otherwise, be watching for the company’s services to roll out nationally in the near future.
Remember this sage advice:
“Invest as though you will live forever, but buy insurance as though you might die tomorrow. “
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