When it comes to life insurance, we often hear the question, “How much do I need?” Well, that all depends on your specific circumstances, but there are definitely a few things you should consider when you’re looking at life insurance plans.
Do I need life insurance?
First, determine whether you need life insurance. This is pretty simple; if you have people that depend on your income, you need coverage. Got kids? A stay-at-home spouse? An ailing parent or relative whom you support? You need life insurance coverage.
What kind should I get?
Next, you need to decide what kind of life insurance to get. This can be tricky, because you’ll read a lot of opinions on which kind is best. If you have your own business and you want to protect your family against the destruction of it, or protect them from estate taxes, whole and universal life insurance might be a good option for you. If, on the other hand, you’re more concerned about the lost income that supports your family or other dependents, then term life insurance is probably all you need.
How much should I get?
Once you decide on the type of insurance to buy, you’ll need to figure out how much to buy. To get a ballpark number consider the following questions:
How much debt do you have?
Aside from a mortgage, are there bills that you pay each month, like credit cards, car loans or other accounts? Do you pay down your debts each month? Basically, if you have a lot of debt, you’re going to need enough life insurance to pay it off completely.
What does your family spend each month?
If you don’t want your family to change their lifestyle or habits, you’ll need enough money to cover these monthly expenses. It’s a good idea to have a monthly budget to determine what you actually spend.
Do you have any savings?
If you have a healthy savings account, you may not need as much life insurance as you thought, since you’ll leave your family some money already. You’ll also want to factor in your long-term savings plans, and how easily those funds can be accessed by your survivors.
Are your kids grown?
If they’re not, you may want to consider college expenses when you determine your life insurance needs. Obviously, these costs can add up, but it’s better to face these numbers now then to leave your family short later.
Got more questions about your life insurance needs? We’re here to help. Call us today and we’ll guide you through the process – so you and your family can start resting easier.