Starting A Budget
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Insurance Category

People will sometimes ask me when they are starting a budget, "How much money should I be setting aside for insurance?" There are several considerations so let's start out by defining what we mean when we talk about the insurance category.

Term Definition
When we talk about budgeting for insurance, we are not talking about housing insurance because that is taken care of in the housing category. Likewise we are not talking about auto insurance because that is taken care of in the transportation category. What we are talking about then is health insurance, dental insurance and life insurance.

Lack Of Faith?
Some people have asked me if having life insurance is akin to having a lack of faith. The reality is that insurance is a necessary thing in today's world. It can be a way for you to ensure your loved ones can survive financially in the event of your unexpected demise.Nobody knows the day of their death and so having life insurance can be a prudent step in providing for your loved ones as long as the insurance does not replace your dependence on God's provision.

How Much Insurance
How much life insurance you need is dependent on your life circumstances and your lifestyle. Do you have small children at home? Is your mortgage paid off? What is the income potential of the surviving spouse? What is your current debt load. All of these things must be taken into consideration when considering how much life insurance to purchase.

Life Insurance Purpose
The purpose of life insurance is to replace the income of the primary income provider. Generally this means 12 to 15 times the annual income of the primary income provider. When this amount is invested at 7%-10% it can generate the income lost by the primary income provider as well as funeral expenses.

Health and Dental Insurance
Many people can get affordable health insurance and dental insurance through their employer. Be sure to check all of the available options to see which one will give you the most services you are likely to use for the best price. Don't hesitate to shop around.

Where Is Your Dependence?
Whether you are just starting your budget or doing an annual review. Your insurance category should not exceed about 5% of your total net spendable income; that is your gross income less your charitable giving and tax withholding. If you have more than that you may have to ask yourself if you are putting more dependence on insurance than on God and His provision.

Join The National Debate!There has been a lot of discussion about health care and health insurance lately. A friend of mine has written an excellent article on health care reform and ways to cut health care costs without increasing the federal deficit. While the article is a little long, it is very much worth the read. So check it out! But, please do not use the article without permission.