Living your life one day at a time sounds great in theory, but imagine if you are living your life one day and unexpectedly gone the next, leaving your wife and 2 small children on their own to pay all the expenses that you have been paying month in and out. How will your family survive financially if you are suddenly gone? If you have dependents it is important to have the right life insurance policy in place, but how much life insurance do you need?
Some Factors To Consider When Determining Your Plan For Life Insurance
These factors below include, but are not limited to:
- Future Expenses- This may include future education costs of your dependents along with the estimated growth of your salary and/or assets.
- Current Expenditures- This may include cost of house payment, any car payment(s) and all bills that accrue on a monthly basis.
- Estimated Expenses After Death- The funeral costs, administrative expenses, estate taxes, as well as possible costs of relocation after death accrues quickly.
- Estimated Costs of Hidden Income- This is “hidden income” lost at death, which may include your employer’s health insurance or a matching contribution to your retirement plan. These are benefits that are outside of your gross wages that are often disregarded.
Some Basic Tips to Consider
- Do Discuss With Your Spouse- You both need to sit down together to estimate costs of life without your salary and what it would take to financially survive.
- Buy As Much Life Insurance as You Can Afford- This is not something to “skimp” on. While you can’t predict the exact growth of your salary or how much expenses will increase down the road, having that buffer will help ensure your spouse and kids can maintain their lifestyle.
- Consider Buying Multiple Insurance Policies- Sometimes buying multiple, smaller policies versus one large life insurance policy may reduce total costs, while ensuring adequate coverage to the times needed.
There Are Certain Myths Surrounding Life Insurance
For decades, some people have recommend multiplying your income by a particular factor (10 or 20) as a great way to measure how much life insurance you need; however, these are meant to merely be guidelines and not to strictly be followed as a way to determine the amount of life insurance you need.
Although there is no way to entirely pinpoint the exact amount of life insurance you may need, you can visit the following link, http://www.lifehappens.org/insurance-overview/life-insurance/calculate-your-needs/ for additional tips to factor how much life insurance is enough. Talking with your N.C. independent insurance agent is always recommended to discuss your life insurance needs and coverage options that will meet those needs. Call our office TODAY at 866-869-3335.