Whether you have a family, own property, or want to leave a legacy for your loved ones, life insurance is an essential part of any sound financial plan. Read on to learn how to determine how much coverage you need.
Ask Yourself These Questions:
- How much of the family income do I provide?
- If I were to die, how would my survivors, especially my children, get by?
- Does anyone else depend on me financially, such as a parent, grandparent, brother or sister?
- Do I have children for whom I would like to set aside money to finish their education in the event of my death?
- How will my family pay final expenses and repay debts after my death
- Do I have family members or organizations to whom I would like to leave money?
- Will there be estate taxes to pay after my death?
- How will inflation affect future needs?
Some insurance experts suggest that you purchase five to eight times your current income. However, it is better to go through the above questions to figure out a more accurate amount.
Will the life insurance provided at my workplace be enough?
Everyone's needs are different. In order to determine how much life insurance, you need, it helps to understand how much your family depends on your financially, the value of the services you provide as well as expenses that might be involved with end-of-life medical bills and burials.
Tips on Buying Life Insurance
- Make sure you feel confident in the insurance agent and company.
- Decide how much you need, for how long, and what you can afford to pay.
- Learn what kinds of policies will provide what you need and pick the one that is best for you.
- Do not sign an application until you review it carefully to be sure the answers are complete and accurate.
- Do not buy life insurance unless you intend to stick with your plan. It may be very costly if you quit during the early years of the policy.
- When you buy a policy, make the check payable to the company, not the agent.