Life Insurance is something no one likes to think about. It’s unpleasant to consider what would happen if you were to pass away, but none of us can deny how important it is to establish a financial plan for your family.
To say it simply, the purpose of life insurance is to replace your income so that your family can maintain their current lifestyle after you die. We all want to make sure our families would be able to pay the mortgage, put food on the table, and purchase the necessities for daily life. However, choosing the appropriate amount of coverage is not quite as simple as looking at your monthly bills.
How Much Is Enough?
Most financial planners will say that you should have coverage between five and ten times your annual salary, but how are you supposed to know which end of the spectrum fits your needs?
There are many common factors that play into how much life insurance a person needs, such as income, lifestyle, and number of dependents. However, there are other factors that are often not considered. For example, a couple without children may think they need minimal coverage, but what if they carry a significant amount of college debt?
In addition to your current monthly expenses, here are some things to consider:
- How much debt does your family have?
- How much do your dependents contribute to the family finances, and will they continue to contribute to the finances in the future?
- Will there be childcare expenses added to the budget if the household is now experiencing a single-parent situation?
- How will your dependents’ financial needs change in the upcoming five to ten years?
- Will any of the children be leaving home and be self-sustaining soon?
- Is there a financial plan in place for the children’s college education?
- If retirement is on the horizon, how will your death affect your spouse’s ability to stop working?
- Are there other assets for the family to draw upon, if necessary?
- What are the funeral costs associated with your family’s beliefs?
The right life insurance coverage varies for each family and each individual. Let us help guide you in making the right life insurance decisions to ensure your family’s financial security. You can call us directly at (877) 215-5431 or email us for more information.
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