Buying Life Insurance How Much is Enough
Life insurance is an important factor in successful financial planning, helping to financially provide for your loved ones in the event of your untimely death.
But how do you know how much coverage is enough? How can you determine how much your family will actually need if they no longer have you to depend on?
Identifying the Basics
First, it’s important to remember that the central purpose of life insurance is to circumvent financial stress after you die, so income replacement should be the foremost purpose of your policy.
That said, it’s important to realize what kind of impact a lost salary would have on your loved ones.
You can start by making a list of what is spent on:
Next, consider the cost for your last expenses. Today, funerals can easily cost thousands of dollars, which doesn’t include any special requests, estate tax or lingering medical bills. And, while most of us don’t like to about the end of our liveslet alone the costit’s important to make sure your loved ones aren’t burdened with the cost of your last expenses.
Long-Term Expenses
After you’ve determined the basic costs, factor in any money you want to leave for your family’s long-term expenses like college tuition, mortgage payments and retirement funds for your spouse. You should also factor in any funds you’d like to leave to local organizations or charities.
Determining Your Assets
Once you’ve determined all your financial needs, it’s time to factor in the assets you already have to put toward your expenses.
Your assets could include:
- Cash
- Savings
- Stocks
- Bonds
- Real estate
- Pension
- Social Security
Subtracting your assets from your expenses will give you a rough estimate of how much life insurance you should purchase to ensure the financial comfort for your loved ones.
The Next Step
Once you’ve got an idea of how much life insurance you need, you can begin shopping around to get an idea of how much a policy will cost you. Sitting down with a licensed life insurance professional will also help to make sure you’ve got all the bases covered.
Nonetheless, it’s important to do a little homework before meeting with a life insurance agent to avoid purchasing coverage you may not needhelping you secure the most affordable life insurance around!
About InsureMe
Megan L. Mahan is a copywriter and insurance information expert with InsureMe in Englewood, Colorado. InsureMe links agents nationwide with consumers shopping for insurance. Specializing in health, home, auto, long-term care and life insurance quotes, the InsureMe network provides thousands of agents with insurance leads every year. For more information, visit InsureMe.com.
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