NerdWallet's Smart Money Podcast - Are You Covered? Hidden Gaps in Life Insurance That Could Cost Your Family

Episode Date: October 20, 2025

Learn how to choose term vs whole life insurance and calculate your coverage so your family stays protected. How much life insurance do you really need? Which is smarter, term or whole life? Hosts Sean Pyles and Elizabeth Ayoola discuss recent smart, fun, and dumb spending to spark a quick audit of your own money habits, then pivot to right-sizing life insurance so your family isn’t left exposed. They begin with a discussion of everyday spending wins and fails, with tips and tricks on reviewing statements to catch unused subscriptions, setting guilt-free “fun” budgets that match your values, and investing in your health and home with intention. Then, insurance Nerd Kaz Weida joins Sean and Elizabeth to discuss a listener’s question about life insurance choices. They explain the DIME method for figuring out how much coverage you need, how to weigh term vs whole based on goals and risk, what costs look like at different ages, and how to handle beneficiaries, trusts, and group coverage from work. Plus: why you should periodically update your beneficiaries as life changes. How much life insurance do you need? NerdWallet’s free life insurance calculator can help you do the math: https://www.nerdwallet.com/article/insurance/how-much-life-insurance-do-i-need  Want us to review your budget? Fill out this form — completely anonymously if you want — and we might feature your budget in a future segment! https://docs.google.com/forms/d/e/1FAIpQLScK53yAufsc4v5UpghhVfxtk2MoyooHzlSIRBnRxUPl3hKBig/viewform?usp=header In their conversation, the Nerds discuss: life insurance, term life insurance, whole life insurance, beneficiary designation, trust vs beneficiary, group term life insurance, life insurance cost in your 30s, life insurance cost in your 40s, cash value life insurance, indexed universal life insurance, variable universal life insurance, estate planning basics, stay-at-home parent life insurance, update life insurance beneficiaries, convert term policy, smoker vs nonsmoker life insurance rates, life insurance medical exam, term vs whole life comparison, permanent life insurance, life insurance through employer, supplemental life insurance, life insurance payout, coverage amount calculator, college fund and life insurance, mortgage protection with life insurance, and prenuptial agreement and finances. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend. Learn more about your ad choices. Visit megaphone.fm/adchoices

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at OnePeloton.ca. Sean, we are always giving people sound financial advice, if I might say so myself, but I feel like it's time to remind listeners that sometimes we go astray to. Speak for yourself, Elizabeth. I have perfect financial hygiene. I never make any missteps ever. So we'll talk about your mistakes. We'll see about that because we're going to be talking about smart, fun, and dumb money. Welcome to Nerd Wallet's Smart Money podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles. And I'm Elizabeth Ayola.

This episode, we're talking about how much life insurance you need. But first, it's time for another round of smart money, dumb money, fun money, where Elizabeth and I talk about three different things that we spent money on recently, that were, you guessed it, smart, dumb, and fun. Our hope is that you can revel in being a little bit nosy, hearing about what Elizabeth and I spend our money on. And also, hopefully, this helps you reflect on how you spend your money, too. And I know we do quite a few segments, but this is one of my favorites because I get to tell my business,

You know, I love doing that. And I get to hear yours too, Sean. You love hearing my business. I know that. I do. Now, this time we're doing things a little differently. Sean and I are going to whip out our bank statements in real time and share our smart, dumb, and fun expenses. All right.

First up, let's talk smart money. Do you see what I did there, Sean? We're going to be talking smart money. Yeah. Clever. Yes. All right. What's a smart expense on your statement, Sean?

And by statement, I'm really just pulling. up my credit card app, so let me look at that and swipe through my million apps that I have open. Okay. So the smartest expense that I have over my last statement period is going to be the amount that I paid for my prenuptial agreement. Oh, yes. I know these are controversial and weirdly still very taboo in the world of money and relationships in 2025, but my partner and I wanted to get a pre-up before we got married because we want to take care of each other in a weird way. I know that pre-nups might seem very transactional and stiff and unromantic, but I view it as a really romantic act of creating this sort of out for each other, and this way we are continuing

to make the decision every day to be with each other, knowing that we could have an easy out and not be locked in because of how expensive divorce is. So that's kind of what I'm thinking about the pre-up. Also, we each have our own property, so it just makes this all simpler for us. but I would love to know if you have an estimate of how much this cost me. Well, first of all, good job to you for getting a prenupt. I think that can be a very sticky conversation to have sometimes and awkward. But before I found out the price, I want to know how you guys bridge that conversation. Who brought it up first?

We both kind of brought it up. It came up gradually over time, and it wasn't really awkward. Oh. I think that for a lot of relationships, if you're in a good place, you should feel comfortable talking about the hard things and the potentials of where things could go over time. And my partner, Garrett, and I try to talk about these things. And it's not always easy, but we just have, I think, good communication hygiene. So even though it felt a little bit weird, it wasn't loaded or fraught, we were just kind of like, yeah, we should do this. Okay. So now I want

to hear your guess. Yes. Tell me. Hmm, pre-nup search. I actually do not know. So I'm going to guess, I'm going to say $1,500. Okay. So I was expecting to pay around $1,000. And in the end, it is $2,500. So a little bit more than I was hoping to pay. But guess what? It's a heck of a lot cheaper than a divorce. I was talking with someone recently, and they said that their divorce cost them $5,000. That's insane.

So $2,500, not much compared to that. No, it's not. So that is definitely a smart financial expense, Sean. I have to give that to you. I think so. I'm patting myself on the back for feeling very mature and adult about all of this. Definitely adulting there. All right. You're up, Elizabeth. What is your smartest purchase recently?

Okay, so as I am scrolling my statement, very interesting expenses going on here. I'm sure. But I think there's a theme here for this month, and that is spending money on hair care. Now, I think that's a smart expense because it's important to me. And I would like my hair to last as long as possible. So what sort of things are you buying for your hair? Okay, so telling my business, and the spirit's on my business, I have struggled with hair loss in the front of my hair. And as a black girl who grew up doing lots of tight braids, especially from a young age, over time, it damaged my follicles.

I went to a dermatologist maybe two years ago, and I did a treatment, and I had significant progress with it. And one of the things they recommended were these, like, it's not just for your hair, is for like hair, hair, skin and nails, I believe, but it's called neutrophys. Is that like just a supplement? Yes, it's a supplement. And it costs me about $80 a month. Oh, wow. Yeah, it's not cheap. Now, in addition to that, I use a hair ointment that the dermatologist prescribed to me,

and that also costs me $80 a month. Yeah, so it's pretty expensive. So, yes, it's smart because it's a way for me to ensure that I have a hairline. And it's working, right? And it's working, and it's working, exactly. And it's good for myself as theme too, right? Because I don't think hair loss is fun for anyone. Yeah, I mean, that's an investment in your physical well-being.

Your hair is healthier. And also mentally, it's so important to feel good. Hair is such an important, complicated, political thing. And you want to feel good about yours. Exactly. So I'll take it. And then I know we're doing one, but I'm throwing something else in there. Okay.

This month has also been strange. Well, not strange. My son has horrible, horrible allergies. Like, people are always asking him if he's crying because his eyes are constantly watering. And we've tried like the Claritin and the Zyrotech and all those things. And nothing seems to work. So we went back to an allergen over the past two weeks. And they said the biggest thing he's allergic to are dust mites.

And I learned something new because I don't know those actual bugs, you know? So I was like, oh, they are. I was mortified. And he has so many stuffed animals. He's a stuffed animal kids. And he sleeps with like 10 million in them. And we had this like five foot tiger that my dad has had since I was a little girl. I'm 36. And you can imagine how much dust that thing has. But long story short, I had to do some

shop and get him a dehumidifier for the house. It cost me about 70 bucks. Maybe an air filter too. Yes. That's on the list as well. I had to get him some hypoallergenic sheets and also a whole bunch of prescriptions that cost me about another, I don't know, 100 bucks. Okay. So the theme I'm seeing is you've been spending a decent amount of money on just health-related things for yourself and for your son. Exactly. Always a smart investment. Okay. Well, let's go on to fun money. What's the most fun thing that you spent your money on recently? Sean, you may remember, I'm saying you may remember like you don't know me that I moved into my home over a year ago now in Houston. And I was spending a crazy amount when I first moved in because I had to redo the whole

house. And what happened is I never finished and I paused. So I had nothing on my walls and I still don't have a dining table. There were just a whole bunch of other things I didn't have. And I think the decorating bug caught me. Once you start, it's hard to stop. And then maybe because fall is coming as well, and I finally found the perfect artwork for my living room. And I have really high ceilings, so they needed to be huge canvases. So I finally got them in and want to know how much the canvases cost me? The canvases, I'm assuming, were more affordable than trying to hang them or frame them. The art itself was, I'm going to guess, what, $100? $350.350. Okay, just for the art itself. All right. I was way underestiming. Is that

including the frame? No. How much was the frame? It could be another $350. Oh, my God. Luckily, no. So it's the flip or the reverse of what you said. So framing cost me $100.

But I was so shocked that it cost $100 to hang some paintings on the wall. That sounds affordable to me. Framing can get so expensive, depending on the frames and the quality, all of it. Mm-hmm. But to be honest, this is my first time doing it. So maybe that's why I'm surprised by the cost. Anyway, that was fun. And then that aside, I went to home.

goods and you know what happens when you go to home goods you buy a bunch of crap you don't need well well i want to say i'm proud of myself there was no expense that i regretted so i got some new throw pillows for my sofa to match the wall art i got some new bedding because fall is coming and it's cold and of course i need to have some fluffy things to lay on you're in nesting mode right now yes i'm nesting i'm nesting so anyway one-note bill for that total for all the home goods stuff Yeah $127 and 35 cents $500

$500, very specific $500? $500? Yes, yes Elizabeth, that is so much money So you spent Okay, art was $350 framing was $100, $450? You spent $950

Is that right? I did. I did. You must have had a lot of fun I did have a lot of fun but let me tell you Luckily, I did not dig into my savings. I am not in debt, so it's money that I had.

Uh-huh. But I am so happy with my purchases. Like, I walk into my house, and I'm so happy. I'm so excited. I'm excited to get into my bed, to sit on the sofa. I love everything that I bought. It's important to feel good about your home space, yeah. Yeah.

So that's worth the money, because you'll spend this money this one time, and then you'll have it for years and years and years to come. Okay, I want to hear about your fun money expense, Sean. What did you buy? Okay, mine is really fun. I am a few days away from flying out to New York for partially a work trip, partially a fun trip. My best college palace live out in the city and in the surrounding metro areas. And they're throwing me a little bachelorette party ahead of my wedding.

We're calling it a chancelorette party. I love it. And we are having a fun and silly angel and devil theme for it. So I'm the angel naturally. And they're going to be my little devil gals. And so I bought some silly outfits for the theme that I'm just going to be wearing all weekend. So I bought some little wings and a halo. I bought some fun shirts. And I just let myself indulge a little bit, even though I've been trying to not spend money on like wants. This, I think, is actually more of a need. So I spent $120 on clothes for my chondelet weekend. And this is just for the clothes. So that felt a little excessive, but I'm going to have so much fun that I don't care. It'll be worth it. And I'll be able to wear most of the things after the weekend, too. Now that's smart. I love a multi-purposing outfit.

And you're only getting married once. So, you know, enjoy yourself. Yeah. This is going to be my only Sean Chilorette party in my entire life. So I really need to invest in it. I love it. And now, because you've told me, I need to see the outfits for the Sean Chilrette. Did I say it right? Okay, good. All right. Of course, yeah. So last up, dum-tum-dum. The most sought after, a dumb money expense. Now, Noah holds bar, Sean. What did you spend dumb money on. My dumb expense is so dumb and boring that I'm mad at myself for it. I just forgot to cancel a subscription to a publication and they wanted to charge me $55 a month. You're joking.

It wasn't just one publication. It was sort of their suite of publications. And I liked what I was reading. Yeah, $55 a month for online access only. I wasn't even getting a print edition. And I meant to cancel it going into September because I was getting a better rate for a year prior to that. I think I was paying a dollar a month, and naturally I forgot to cancel it in time. I was one day late to cancel it. So they did charge me the $54.99 in September, but I made sure to cancel it after that. So, yeah, that's just me forgetting to do the classic thing of canceling a subscription. So reminder, PSA to all listeners, look through your subscriptions and cancel the ones that you don't actually use. We're living the same life. I know you haven't asked me yet,

but I'm going to tell you my dumb. Is that yours? Tell me. What is your dumb expense? It is. Oh, my gosh. So, again, this is why it's so important to practice what you preach and look through your statements thoroughly, right? Because I will not lie. Sometimes I just scam and look for the biggest expense. And, like, who spent that? But as I was looking, I saw a $50 charge and I was like, it was Amazon kids. I was like, I don't watch Amazon kids.

My son don't watch Amazon kids. Why am I getting charged for this? I didn't even know. I was like, I don't know what this is. So I jumped into, forgive me, about to be accusing my son of buying something on the TV. So I was winning her. for him to get home from school to be like, what did you buy? What did you buy? And then I was like, wait, Amazon Kids, Amazon Kids. Long story short, he has a tablet from Amazon, which he had when he was

a kid. He does not use it anymore. So I completely forgot about it. And it charges me annually for access to the games. So I'm like, we don't even use this thing. What a waste of money. So it's so painful because I can't, you know, I can't really challenge the charge because it's my fault. We're both making some dumb choices here. But hey, look, we corrected them. So that's the smart action after a dumb expense. That's right. Sure went and hit cancel. Up next, we'll be talking about how much life insurance that you need.

But before we get into that, listeners, a reminder to send us your money questions. Anything you want help with in your financial life, we nerds are here for you. Maybe you want to know whether you're spending your money the right way, and you want to figure out how to cut out all of those dumb money expenses. We're here to help. Leave us a voicemail or text us on the nerd hotline at 901-730.

6373. That's 901.730 NERD. Or email us at podcast at nerdwollet.com. Okay, let's get to this episode's Money Question. That's up next. Stay with us. It's the matchat or the three ensemble Cadocephora of the Fats that I've been to deniches so much. It's the form of standard and mini-regrouped. And, and the embellage, too beau,

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make sure they have everything they need. with a community of support, warm meals, and a place to rest. Because when a child is sick, family stays, and Ronald McDonald's House stays with them. We're back and answering your money questions to help you make smarter financial decisions. This episode's question comes from a listener who prefers to stay anonymous. My mom passed in May.

Soon after she passed, we learned that she didn't have very much life insurance, which is making things hard for my dad. To prepare ourselves and our son for the future, my husband and I are trying to determine how much life insurance we need and if we should focus on term or whole life. We are both healthy and in our late 30s. Additionally, if we create a trust, do we make the beneficiary the trust or our spouse slash son? To help us answer this anonymous listener's question, on this episode of the podcast, we are joined by insurance nerd, Kaz Wida. Hey, Kaz. Hello.

Hey, Kaz. Welcome to Smart Money. Thank you. So the world of life insurance, as you know, someone who's written in the space for a while, can be really confusing and there's a lot of vocabulary to pin down. So let's start by laying out some of these definitions. There are a lot of different kinds of life insurance, many of which aren't a great idea for most folks. But the two most common are term life insurance and whole life insurance, which is a form of permanent life insurance. So can you give us a quick explanation of each type? Before we dive into that, I'm so glad you got this question because, unfortunately, a lot of people don't think about life insurance until it's sort of too late. So sad, we have someone posing as a cautionary tale here of what can happen when you're underinsured. So the two basic forms of life insurance, as you said, these two basic buckets that life insurance fall into, term life insurance and permanent life insurance. And they are pretty much exactly what they sound like. Term life insurance is, life insurance that extends for a certain term or time period. So 10, 20, sometimes 30 years, the insurer will pay out a death benefit to your beneficiaries if you die within the term of the policy. Permanent life insurance is, again, sort of what it sounds like, you are paying for permanent life insurance coverage. But along with that, of course, comes a caveat, which is it can be much more expensive than term life insurance. Well, Cass, can you explain when one of these options

might be better than the others? What kind of factors should people be considering when they're wearing their options? So at NerdWallet, we sort of tell everyone, hey, for most people, term life insurance is going to be the way to go. And there's a couple of reasons for that. The first is that term life insurance is, of course, really affordable. And that's going to fit most people's budgets depending on where they're at. And it's especially affordable if you're looking at buying life insurance when you're young and you're healthy. So as you age, of course, life insurance gets more expensive because it gets more risky for the insurer. The other reason we say term life insurance is usually going to work best for most people is that's sort of the point of life

insurance is to ensure you for a time period when if your family were to lose your income, it would be a financial burden for them. And that's usually a set number of years, right, when you're in your prime working years. That is not to say, though, that permanent life insurance doesn't have its uses. So permanent life insurance can be a good idea in a few scenarios for people. Usually folks who are looking to maybe shelter an estate, a large estate from taxes, or perhaps looking to diversify retirement income as older adults. There are even some scenarios where permanent life insurance can be used. Some smaller policies get used just for final expenses, burial costs. And then some folks like the lifelong coverage because they're looking at providing for perhaps a child or another dependent with disabilities.

And so they want that insurance policy to really. last well into adulthood for that child. Whenever we talk about life insurance on smart money and I have the same house view as you has that most folks' term is the best, we always hear from someone who says whole is better and in fact very few term policies pay out, which is true. And that's actually part of why term is so much more affordable because it's actually pretty unlikely that you're going to have to pay out that policy, which I'll say is a good thing because that means that you didn't die during the terms of your policy.

Right. Another thing I want to get into is, like I mentioned earlier, there are a lot of kind of eccentric forms of life insurance, things like universal index life insurance and variable universal life insurance. And these are actually kind of hybrids of investment accounts and life insurance products. This idea of having investments with your life insurance can be really appealing to people because they think it's some kind of secret financial product. But I'm really, really wary of them. So, Kaz, can you talk a little bit more? more about these accounts and what their use case might be? So like you, I'm wary of any sort of product, and this includes insurance products that

have a lot of complicated sounding words in the title. You know, if I don't know what they mean, I want to make sure I really understand what I'm getting. And insurance works this way, too. Before we talk about those specific products, we probably want to talk about what's so attractive about permanent life insurance for folks. And part of this is a feature that's built in to permanent life insurance. and that is cash value. So when you pay your premium for your life insurance, part of it goes

towards insuring you, the cost of the policy, those sorts of things. But the other part of your premium goes towards building cash value. Depending on the type of permanent life insurance you have, it may grow quite slowly. It may take several years for you to build up any cash value that you could potentially use in any way. But eventually this pool of cash money that you have been building through your life insurance is supposed to be something you can borrow against later, perhaps used to pay the premiums on the policy. So it's just a sort of self-sufficient or even withdraw or surrender later on if that were to become a need. So permanent life insurance is attractive for that reason and it serves a purpose for some folks because of the cash value. Now that being said,

you referred specifically to indexed universal life insurance, I believe. And part of the problem with those particular types of life insurance is that there is more risk. So index specifically, the cash value grows according to stock indexes. So your pool of money might grow quite quickly and it might be really encouraging when the stock market is up. When it goes down, maybe not so much. And you do face a situation in which if you don't keep a close eye on that, that policy and on your pool of money, your cash value, your policy could become underfunded and you could risk losing your coverage if you didn't pay the difference. So there's risk there certainly with some of those permanent life insurance policies and they're really for people

who are comfortable with that risk. And additionally, the fees on these accounts tend to be higher than the fee you would pay for a taxable brokerage account too. So I like having different products for distinct purposes. I'm investing through my taxable brokerage account. I have my life insurance elsewhere, I don't really care to intermingle the two because of the fees and the mixed intention behind them. So that's just me. So for people who are looking at it maybe as a potential long-term investment vehicle, how would you say they weigh whether they should get a whole-term life insurance policy and use that or just invest in the stock market? Yeah, I mean, I think as Sean pointed out, for the most part, using life insurance as an investment vehicle isn't necessarily

going to work out the way you think it's going to work out. So normally it's an avenue for folks who have sort of exhausted all the other avenues for investment and, you know, sort of those tax-advantaged accounts. So this is a place you could put some money if you didn't have another place to put it and you wanted it to grow in a certain way. Yeah, if you're really trying to hide your money from the IRS and you've maxed out your 401k and all other options, maybe you can look into these next. And I just want to point, it's legal. Yeah. I was going to say, I don't think we're advocating that, but yes. No.

No, yeah. All right, let's pivot a little and talk about how much life insurance one might need. This is a common question I hear people ask. Our listener said that their mother didn't have a lot, and this is making things hard for their father. There are a few different ways that folks can determine how much life insurance they might need. Can you lay those out for us, Cass? Sure. And I have a lot of compassion for this scenario because this is really common, unfortunately.

you know, you have one parent and maybe they're more traditionally employed and they have group life insurance or something through work and then the other parent does not, either because they're a freelancer, which is pretty common now, a contractor, maybe a stay-at-home parent. So this is a really common scenario. Trying to figure out how much life insurance you need can kind of be a difficult exercise depending upon how you come at it and what your circumstances are. So we can sort of look at those methods. But before we do that, let me just say there's a really simple way to think about life insurance, which is if someone in your family were to die and that the death of that person would cause a financial burden on the survivors, that person should have a life insurance policy, no matter who they are.

So that's a good way to think about, do I need life insurance? When you're thinking about how much you need, there's basically three methods that you hear about a lot from life insurance agents and in the industry. The first is pretty simple. It's take your annual salary, multiply by 10. So just put a zero on the end of it. And that's how much life insurance you should have. I would say this method is not really ideal because, as you can imagine, it fails to account for a lot of different things that are pretty common for most people, having kids, having a mortgage, maybe even having student loans. things like that. So it could be enough life insurance for you, depending on your situation.

The second method is to do that simple method, but then you add 100,000 per child. And the idea behind that is I want to capture educational expenses, college, private school, all the things that you would pay for as a parent if you were there to be able to support those things. And that's certainly a little bit better than our first method, if you're a parent. The third method, which is something that we discuss a lot at Nerd Wallet on the insurance team and that we encourage folks to think about. It's called dime. And I guess anytime you need an acronym to remember something, it's a little more complicated, so bear with me. The D and DIM is for debt. So you want to take a look at what are your debts? What's your mortgage? Car loans, student loans, all of those types of

things hiding in corners, credit card balances, put that all into the balance of the life insurance coverage that you would need. The I in dime is for income. So what we were talking about with the methods before, you want to multiply your annual salary times some number of years. I'm not saying it's 10. It's probably not if you're younger, hopefully. It might be 20. It might be even more than that. The M in dime is for mortgage, and this is for folks who own house, and that's probably a pretty big ticket debt that you want to make sure you capture in some way if you didn't capture it under debts. And then the last part of dime is E for education, which we talked about before. You want to add some money for educational expenses for any kids that you have that you would want to support that for them.

And so this method obviously is a little more thorough than the other methods. And if you're like, I don't want to do that math, it's okay. You can come over to NerdWallet. We have some calculators that do it for you on the website. One of them is called, How Much Insurance Do I Need? You can just plug your stuff in and it'll spit you out a number. And we'll include a link to that calculator in our show notes. One thing I want to go back to, Kaz, is the idea of being a financial burden because I think a lot of people might not understand that these come in many forms.

If someone is working in the house but not bringing in an income, that's a form of labor, even though they aren't earning a salary. So if the parent who is the primary home manager, kid caretaker passes, that can create a huge financial burden in the household because you have to think about the child care that you would need among other things too. So I would encourage people to really think hard about this idea of financial burden and whether they do need life insurance or not. This is something that I just recently wrote about, actually. A lot of times stay-at-home parents are not part of these life insurance conversations and they really should be because there's a definite value there that is not represented. in some life insurance approaches. I love the dime example that you gave in terms of how to calculate your net worth, but I had a question about where your existing net worth fits into that.

So let's say you have, I don't know, $100,000 or $200,000 already in your 401K, where does that factor into how much life insurance that you need? So what we tell people about 401Ks and things like that is those are not liquid assets. So that's not something you're going to be able to tap into quickly. That's going to get tied up in all sorts of other legal proceeds. And what you want to do, if you're looking for, is there something that I have already on the table that I can pass along to my beneficiaries? That means I don't need as much life insurance coverage. You want to just look at straightforward savings. What's in your savings account?

What's in your money market? What can you liquidate? That you can subtract from your bottom line. So if you were doing the dye method and then you wanted to subtract because you have, you know, a pool of money just sitting there, you could subtract that if it was in a liquid. would form and easily accessible to you. All right. So the price of life insurance can vary pretty widely. How much should our listener expect to pay for their life insurance? I can get you in the right ballpark.

Hard to know without having a lot of details about your health, which your insurer is going to want to know for sure. So be aware of that. But I think you'll be surprised how affordable, especially term life insurance is, if you're young and healthy, this is pretty shocking for some folks who think of life insurance as something that's more expensive. So if you're looking at a 20-year term policy, and that's the average term policy that people buy, that's the most frequent term folks purchase. About $500,000 is what most folks are buying these days. If you're looking at that for a 40-year-old and you

break it down by a per month cost, it's going to cost you about $26 a month. And I'll put some caveats around that, which is you can't be a smoker. So that's for a non-smoker and you have to be in good health, excellent health. But fairly affordable cost, especially when you break it down in a per month. That's about how much my HBO max subscription costs. I know. I'm in the boat with you. I got Netflix. Anyway, so I like what you said, I did go from whole life to term, and I went from paying around $200 a month to around that 26. So it's a significant amount in savings there. Our listener mentioned that they and their partner are both in their 30s and they're healthy. So how might that factor into the equation. Knowing those details helps you sort of filter out some of the noise

there. At 30 life insurance, especially term life insurance, is super affordable. So you're talking about the same sort of policy, 20-year term, $500,000 in coverage. You're going to look at about $200 annually, depending on the same factors. You can't be a smoker and you've got to be in pretty good health. But that works out to be, you know, under $20 a month, which I think most families would find fairly affordable and certainly better to leave behind a life insurance payout than your HBO subscriptions. That might be up for debate depending on who's getting access to it. I know, right? Fair. One thing I'm thinking about is whether our listener has life insurance through their employer through a group term life policy, a lot of folks can get up to $50,000

in coverage for free through their employers if this type of benefit is offered. And people can also usually pay for additional coverage if that 50K isn't enough for them. Also, some employers let you even convert these policies to your own when you leave that employer. And that can be a huge benefit letting you take this coverage with you. So, Kaz, how do you think our listener should consider this type of group term life coverage as it compares to other options? Yeah, I mean, I think a lot of people have group life insurance and some of us don't even know it. We click a box when we go through the benefits and then sort of forget about it. But there are a lot of folks covered through their employer, but these are rather small policies in terms of life

insurance. So at NerdWallet, what we say to folks is yes, absolutely great that you have group life insurance. Term life insurance would be a better bet getting an individual term term policy on top of whatever group life insurance you have so that you have some additional coverage. You can buy supplemental insurance, sometimes through your employer, but typically some of the rates might be a little bit better if you go out and shop for an individual policy. So we just encourage people, great that you have group life insurance, probably need more than whatever group life insurance you have. So take a look at that coverage and then make sure you have enough for your situation. That makes sense. Something I think people should also consider is that with group

term life insurance, people generally don't need to go through a health assessment, which is a common part of getting other life insurance policies. So for people who might have a chronic health condition, these workplace plans can be really helpful and can be a pretty easy way to get much more affordable coverage. But again, it might not be as much as you would actually need in general. So explore all of your options here. And there are some insurers who do specialize in specific kinds of coverage for people with some pre-existing conditions. So doing your research can really pay off. And we try to help folks do that at NerdWallet. Well, now let's get to the last part of our listener's question about who to designate the beneficiary of their trust, their spouse

and their son, or the trust itself. Now, Kaz Elizabeth, correct me if I'm wrong here, but I'm not aware of a scenario where the trust can be the beneficiary of itself, because I think the money would just go right back where it already is. So assuming the goal of this trust is to distribute assets to the listener's family after their death, our listener would likely want to designate their son and or their spouse as the beneficiary or beneficiaries, because you can have multiple. And There are a lot of different ways to structure trusts. So what I would recommend our listener do is consult with an estate attorney who can answer all of their questions and ensure the trust is set up exactly how they want it because this can get so complicated.

Elizabeth, I know that you have a trust for your son. So can you talk a little bit about how yours is set up and what the process was like to establish it? My son is a minor. He's only seven years old at the moment. So heavens forbid I was raptured. He wouldn't legally be allowed to manage the money on his own. So what I had to do is, and I think this was actually the hardest part, think about beneficiaries for my trust and also guardians that I want to help manage the money for him until he's of legal age. And as a single mom who lives far away from family, that was a difficult process to think through who I trusted to manage the funds for him and also who I trusted to be his guardian.

I did use rocket lawyer for the whole process, though, because I do not have a complicated estate. Yes, that means don't email me for money because I ain't got none for you. So if you don't have a complex estate, you can use an online platform like Rocket Lawyer to go through the process. But yeah, that's essentially what I did. So I have multiple beneficiaries in case one passes away, so another one can take over. And I also did it in a way where I broke up the responsibilities for distributing the assets as well. So one person might be responsible for daily expenses, another for educational expenses. And the thing I love about the trust as well is I was able to layer when he receives the money.

So it's going to be in different batches at different life stages. versus all at once. Yeah, and using a tool like Rocket Lawyer can be super helpful for getting in the door, but I would recommend anyone who uses a tool like that to consult with an attorney too just to make sure that all the eyes are dotted and teaser crossed because these documents can be really complicated

and you don't want something to go awry after you pass because something in the paperwork wasn't exactly how it needed to be and that was maybe on the fault of Rocket Lawyer for not having their stuff properly set up. Oh, sorry, I did forget to add that I had an estate attorney look over the trust as well to make sure everything looked okay. So thank you for that tip, Sean. Of course. Okay. Well, Kaz, any final words of wisdom that you'd like to leave our listeners with around shopping for life insurance or maybe the trust question, anything that we've talked about

today? One of the things that we often advise people is not only to, you know, update your coverage, make sure you have enough coverage, but also remember to update your beneficiaries. This too often happens where there are life insurance policies. You've got everything in place. Fortunately, you did not update your beneficiaries, and it sort of complicates things. So make sure that you periodically just check in every year or so. Make sure that all of that, all your teas, you know, are crossed and your eyes dotted because this is something that is going to end up causing some headaches in the future if it's not. Well, Cass, thank you so much for coming on and sharing your insights today.

Yeah, my pleasure. Thanks so much for having me. And that's all we have for this episode. Remember a listener that we're here to answer your money questions, so turn to the nerds and call or text us your questions at 901-730 6373. That's 901-730 N-N-E-R-D. You can also email us at podcast at nerdwollet.com. Join us next time to hear a lightning round about different financial topics from housing to investing. Follow smart money on your favorite podcast app that includes Spotify, Apple Podcasts, and IHeartRadio to automatically download new episodes. Here's our brief disclaimer. We are not your financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. This episode is produced by Tess Vigland, Hillary Georgie, help with editing, Nick Kursomey mixed our audio, and a big thank you to nerd wallets editors for all of their help. And with that said, until next time, turn to the nerds.