In Life

Life insurance is a topic that many people avoid talking about because, well, it signifies the sad reality of our mortality. In truth, life insurance isn’t about death as much as it’s about protecting and providing financial security for the living. If you’ve got anyone who depends on you financially, you need to think about purchasing life insurance to protect them. But how much is enough? How can you be sure that the amount you choose will really be adequate to help your loved ones carry on in your absence? Let’s take a look.

First, determine what’s already available to you.

If you’re working full time, you may already have some sort of coverage from your employer. Unfortunately, this type of policy typically only covers an amount up to or equal to your annual salary, or a bit more. In reality, a year’s worth of income is not enough to care for a family, at least not long-term.

In addition, life insurance policies through your work are not portable, meaning the policy doesn’t come with you when you leave.  If your health has changed or you become disabled, you may not be able to get life insurance at a favorable rate or may not be able to get it at all. That’s why purchasing supplemental life insurance is always recommended.

Next, assess your family’s current needs.

How much money does it take to maintain your household? What are your monthly bills and living expenses? Don’t forget to consider how much it will cost to make final arrangements, such as funeral costs and estate taxes. Tally all of these things and you’ll have a good idea of how much of a life insurance quote to ask for.

You’ll also want to consider future financial obligations.

Beyond the everyday expenses your family has today, remember that there will also likely be a number of obligations down the road to consider. For example, if you have young children, you may wish to include the estimated costs of continuing education as part of your total life insurance coverage.

Now, figure out your available resources.

How much money would be reasonably accessible should you or your spouse pass away? For example, how much are each of your salaries, and do you have any savings or long-term investments (like IRAs or 401k’s) that can be leveraged to offset some of the present and future living expenses? Also, consider other avenues, such as Social Security survivor benefits and any other existing life insurance policies that may already be in place.

Ultimately, determining what type of life insurance policy as well as how much life insurance coverage you’ll need will require a good amount of planning and preparation. Sitting down with an experienced insurance professional can help ensure that every angle is considered and that you end up with a product and amount that are ideal for your specific needs.

If you could use some guidance in this area or would like a free, no-obligation life insurance quote, contact us today.

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