You probably know that everyone needs at least a basic life insurance policy, to cover burial costs and any unpaid debts in the event of your death. But once you get married, buy a house, have kids, and so on, your life insurance needs begin to change drastically with each big change in your life. So, how much life insurance do you really need? The answer might surprise you.
Consider needs now… and in the future. Any life insurance needs assessment will account for both current and future needs. For example, if something happens to you, it’s not just your family’s immediate needs that you should worry about. What about future needs, such as your kids’ college educations? Life insurance can address both current lifestyle requirements as well as the things you hoped to provide in the future.
Calculate current financial needs (your annual salary, times the number of years your family will continue to need that income). Add your mortgage balance, burial costs, and other debts, account for inflation, and then factor in expenses such college tuition for the kids. If your children are young, consider the cost of childcare for your surviving spouse. This gives you a good starting point.
Include life insurance as part of a comprehensive financial plan. Rather than simply purchasing a policy in the amount you feel you need, consider life insurance as part of an overall, long-term financial plan. Work with a skilled financial planner or insurance agent to discuss the benefits of various forms of life insurance. Some will not only provide for your family in the event of your passing, but can also build cash value that you can access later.
Buy more than you think you need. There will always be expenses that we can’t anticipate. Consider a policy just a little larger than you think you need.
Work with a qualified insurance agent. An experienced life insurance specialist can help you examine your situation from all angles, and make recommendations for the right amount of coverage. Give us a call, and we’ll help you perform a needs analysis to determine how much life insurance you really need.