Life insurance does not have to be complicated; it just needs to be specific to your family and your needs. There are a few things to discuss when considering how much life insurance is enough. Forbes published an article on life insurance that breaks it down in a simplified equation: [Financial obligations you want to cover] – [existing assets that can be used toward bills] = Your life insurance need.
If your true goal is income replacement for your immediate family, consider the following items: large debts that need to be paid off, how many years you want to replace your income, and any college tuition you would want to cover for your children. If you are looking to only cover burial costs, then the level of coverage is very different. The first step is to identify what/who you are trying to protect and then determine what assets you already have to pair with your life insurance.
The next question you need to ask yourself is how long do I need that safehold in place? If you have a 3 and a 5-year-old, you are going to need income replacement plus college tuition funds covered for at least 20 years, if not longer. A different question to ask yourself, is how many years you have left to pay off your mortgage? That will also change how long you need coverage.
When you come into our office or call Specialty Risk and are looking for life insurance, these are the type of questions we will ask, and the conversations we need to have. Sometimes your reasoning for needing life insurance is that the bank won’t approve a loan until you have some. We understand that too. When you think of life insurance, anywhere from basic term life to a whole life policy, give us a call. We would be honored to help protect your family.