Still, life insurance can be an important building block for your financial plan. And It can help you and your family achieve financial stability, while giving you some peace of mind. Also it may not be as expensive as you might think.

Life insurance could be for anyone who:

• Has a spouse or partner, dependents, or aging parents who depend on them financially.
• Has a mortgage or some other big financial obligation to pay off.
• Is a stay-at-home parent who provides unpaid but essential childcare, transportation, and household work that keeps your family functioning.

Read on and we’ll explain.

What is life insurance?

Life insurance is a contract between you and an insurer that can pay money, usually a lump sum, when you die, to your beneficiaries. Just as auto insurance covers you in the event of a crash, life insurance can cover your spouse, partner, and dependents in the event that you pass away. 

You can think of life insurance as a life raft. It can provide your dependents and loved ones with financial resources to stay afloat, which is especially important if you were the primary earner in your family.

There are multiple types of life insurance, with two of the most popular being term life and whole life.

What’s term life insurance?

Term life insurance is a life insurance policy that offers protection for a specific period of time, or for a set “term.” Most commonly, you can purchase policies that last for 5, 10, 20, or 30 years. 

So, If you have a term life policy for 20 years and die within the 20 years, your beneficiaries can receive the payout from the term life policy. There are no restrictions on what your dependents can use the payout for, such as funeral or housing costs, or for day-to-day expenses.

Term life policies generally have lower monthly premiums than whole life policies. However, term life policies do not accumulate in cash value and expire at the end of the term.  That means you forfeit the funds that would have been paid out if you had died. Some policies may give you an option to renew for a new term when the old term expires, but the monthly premium is likely to be higher, because you will be older. 

Good to know: The payout for term life insurance is typically tax free.

What’s whole life insurance?

Whole life insurance, on the other hand, provides a cash payout to your beneficiaries regardless of when you die. (To help you remember how it differs from term, think of it as being valid for your  “whole life.”) Whole life policy monthly premiums are typically more expensive than those for term life policies.

In contrast to term life policies, whole life policies accumulate cash value over time from the premiums you pay, and this money typically grows tax-free. Some whole life insurance plans may even pay dividends as a distribution of the insurance company’s profits¹.  What’s more, policyholders can also borrow against the cash value of their accounts during their lifetimes. Assuming the account is current, there may be a payout when the policy holder dies. That payout will vary from policy to policy, according to state regulations, and depending on the cause of death.  Like term-life payouts, whole life policy payouts are also tax free. 

What do term life and whole life policies cost?

The cost of your policy can depend on the type and amount of coverage you want, how old you are, and where you live, among other factors. Term life policies for a healthy 35-year-old can average about $40 a month for several hundred thousand dollars worth of coverage. Whole life premiums, on the other hand, can cost significantly more for the same person.

The key differences

While both term life and whole life insurance have some obvious similarities, here’s a rundown of some key differences:

• Term life policies are for set durations of time, or “term”
• Whole life policies cover you for your entire lifetime.
• Term life policies are generally less expensive.
• Whole life policies accumulate cash value over time.
• Whole life policies can pay out dividends¹.

Which should you choose?

How should you decide between a term or whole life policy? The answer will depend on your particular situation and goals.

If you want to make sure your family is covered in the event of your death for a specific period of time, and prefer lower premiums, then a term life policy could be a good choice. Some life insurance experts say that because term life insurance is cheaper, it can allow you to take the money you save and use it to invest in stocks, bonds and funds.

If you want life insurance with coverage for your entire lifetime, and you want to use your policy as an account that gains value over time, and you are comfortable with possibly higher fees, then a whole life policy may be a better choice for you.

Why Stash partners with Bestow²

With prices starting at $8 a month and coverage starting at $50,000 (up to $1,000,000), Bestow has term life insurance options for Stash users as they look to continue their journey to making personal finance a source of hope. 

Bestow’s application and underwriting process is 100% online and requires no medical exam³, which can make shopping for life insurance easy and affordable. It’s as simple as filling out a form, and there’s no need to speak with an agent. But, if you do need to speak to someone for some guidance, the Bestow team can easily be reached on the phone, email, or chat.

You can go to Bestow’s website, and literally walk away from your computer with a quote for term life insurance coverage.

The post What’s Life Insurance and Why You May Need It appeared first on Stash Learn.

Living within your means isn’t always easy. In fact, more than half of Americans live paycheck to paycheck or spend more than they earn, according to a recent study. But there’s hope! 

Establishing a budget can help give you a clear sense of how much money you have coming in and how much you spend. That’s powerful information to help you make smart decisions about how to save, spend, pay off debts, cut down on expenses, and live within your means.

The transition to living on a budget can be tough, however. If you’re used to a hands-off approach to managing your finances, a budget might feel restrictive and even a little overwhelming. Here are some tips for building a budget suited to your life.

Be realistic

Your budget will only work if it actually covers all of your costs. You might be surprised how easy it is to lowball your spending. Consider that 84% of Americans underestimate how much they spend each month on subscription services like cell phone plans, streaming services and cloud storage. What’s more, the majority of those people were off by about $100–$200—an amount that could throw off your monthly budget.

In order to correctly build your budget, carefully drill down into at least one month’s worth of expenses—more if you can bear it—to get a realistic sense of your spending. Account for everything ranging from essentials, such as rent, utilities, groceries and transportation, to non-essentials, such as entertainment and dining out. Don’t forget to add in occasional expenses that might not come up every month, like car maintenance, gifts and travel.

Have an emergency fund

At some point along your budgeting journey, you’re probably going to hit some rough waters. And it turns out that 40% of Americans don’t have enough cash to cover an unexpected $400 expense. That can be a serious problem because surprise expenses are part of life—cars break down, roommates move out and medical bills land in your mailbox. Facing a big cost you didn’t budget for may throw you off course for a long time.

An emergency fund can help you cover unexpected bills without upsetting your monthly cash flow. Plan ahead for those unpleasant surprises by setting aside a little bit every month to build up an emergency fund equal to three to six months worth of expenses.

Treat yourself

If you only focus on pinching pennies, your budget may start to feel like a chokehold. Researchers have found that frequent rewards are a good incentive to keep you on track with your goals, so make long-term budgeting easier by building in some rewards. One strategy to try is “temptation bundling,” a term coined by researcher Katherine Milkman. The idea here is you’re more likely to do something you should do when you pair it with something you do want to do, like going for a run while listening to your favorite podcast. So when you stick to your budget for the month, pair it with a treat like dinner at a nice restaurant. (Don’t forget to build your treat into your budget!)

Stick to it

Once your budget is complete, the hard part is over, right? All you have to do is follow it. But that may be easier said than done.

The best budget is the one you can stick to. To keep yourself on task, try using an app that helps you track your spending and savings goals. That way, you can check your budget before you make spending decisions. By keeping your budget close at hand, it’ll be easier to determine when you should skip going out for a happy hour or resist an impulse purchase. And seeing your success can help you stay motivated to keep going.

Bear in mind, too, that your budget should shift along with your life. If you decide to adopt a dog, for instance, you’ll need to allocate funds for food, vet visits and treats—and you might decide to cut back on evenings out. Before you do get the dog, you should also make sure that you’re willing and able to make those changes to your budget. 

If you’re consistently overspending, go back to the drawing board. Consider if there are any expenses you can cut down—maybe you can cancel a subscription you hardly use or shop around for cheaper car insurance. Also, ask yourself whether your budget is too strict. Increasing your budget for dinners out, for example, might be a more realistic depiction of your actual lifestyle.

The post Why Living on a Budget is Easier Than You Think appeared first on Stash Learn.