07 Jan 2015 How Much Life Insurance Is Enough?
Life insurance is an important investment which you should consider if:
- You’re getting married
- You have a spouse, family or someone who depends on you financially
- Your expecting your first child
- You’re switching or in between jobs
- You don’t have much in savings
- You have a significant amount of debt
- You have a sizable estate
- You own a business
- You’re planning for retirement
It’s the age old question – how much life insurance is enough? Thinking about and understanding your options when it comes to life insurance is a crucial step in planning for your future, as well as the future of your loved ones. A life insurance policy will provide your family with stability in the event of your untimely absence; but it’ll also provide you with peace-of-mind of today.
What’s the right amount of life insurance for you? Seems like a loaded question, doesn’t it? With varying responses depending on whom you ask – my response to this question varies greatly depending on whom I am speaking with. Certain factors, such as age and current income level for instance, dictate ‘how much life insurance is enough’ for you.
You’ll want to calculate an approximate total of:
- Final expenses
- Estate taxes and fees
- Unpaid medical bills
- Any outstanding debts owed, this includes your mortgage, student loans, business loans, and any credit card debt
- Your yearly income that will be absent and for how many years
Things to keep in mind:
- Your family will no longer have your yearly income.
- Your estimate should include inflation and bear in mind that cost of living increases each year.
- Do you financially support your children? Your aging parents?
- How old are your children? Will your kids need help funding their college years?
So, how much life insurance is enough? Not matter how simply I try to make the answer; it’s simply a complicated question. Remember, this isn’t a scientific algorithm, and it’s certainly not some magical life insurance equation. When it comes to life insurance each person’s needs are different.
Let your life insurance agent help to take a financial inventory of your life so that you can make an informed decision about the amount of life insurance that’s right for you. We’d be happy to walk you through the process from beginning to end. Let us help to find you the right life insurance company and policy that’ll best protect you and your family.
*Authored by Amanda Spittell.
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For more information about this topic, or to get answers about your current insurance situation, stop our office in Franklin, Massachusetts or give us a call at (800) 941-3317.