Tag Archives: Life Insurance

What is the Right Amount of Life Insurance?

What is the Right Amount of Life Insurance?

You work hard for your money. It’s yours, and we want you to maximize every dollar spent. We also want to make sure that you have the right life insurance coverage that provides you with the peace of mind that your loved ones will be comfortably covered. While there are many important reasons to purchase life insurance, here are a few thoughts to help you determine how much life insurance you’ll need.

Ask yourself these few questions:

  • Are your dependents financially prepared for the death of a family member?
  • Does anyone in your life depend on you?
  • How much debt do you have?
  • What are your future financial obligations?

Let’s discuss why these questions are so important.

Are your dependents financially prepared for the death of a family member?

The death of a family member is stressful enough. Words can’t and will never be able to articulate how stressful, never mind the added financial burden of the loss of a loved one is. This is why it’s important to ask yourself how financially stable your family and dependents are. If you think there is the possibility of any struggle, or if you want to even prevent the possibility of financial struggle, a life insurance policy in this situation makes sense.

Does anyone in your life depend on you?

The main purpose of life insurance is to make sure that your family and beneficiaries are taken care of financially if anything happened to you.  So, plain and simple, if you said “yes” to the question of, “does anyone depend on you?” then you need life insurance. When determining the right plan, ask yourself what kind of life standard do you want your family to have if something unfortunate happened to you. Most people simply want to maintain the same standard of their current living situation. This question is important to determine when scoping out your policy.

How much debt do you have?

All of your debts need to be paid off. So if you have a $250,000 mortgage, $15,000 car loan, and $5,000 in credit card debt, you’ll need at least $270,000 in your policy. However, be smart and have a little more to consider interest. This is just the baseline number that you would need to cover your debts.

What are your future financial obligations?

This I often the hardest section to answer.  Simply because it’s difficult to predict the future. It’s hard to know what we’re having for dinner tomorrow, let alone what our life will look like in 10 years. As you’re thinking about your future obligations, consider if you’re going to help pay for your children’s college or any other large financial contributions in the future.  In addition, map out your family’s cash flow to get a better sense of the entire landscape and how much you should have in your policy.

Now it’s time to determine how much life insurance you need. Always remember this, life insurance can be complicated, but knowing what your options are and why you’re paying for specific aspects of your plan is why we’re here. So, give us a ring, we’re more than happy to talk through your current or potential policy.

5 Checkboxes Engaged Couples Should Check

Congratulations – you’re engaged! You’re marrying your best friend and you can’t be more excited. You nailed down the venue, purchased the rings, invited all your family and friends, wrote your vows, and have the wedding party solidified. All the hard stuff is done, but the important stuff still needs to be completed: getting your financial lives in sync. Here are a few tips to get started if you want to live a lifetime of happiness.

engaged

1. Discuss all the key financial information with your partner. Provide each other with key account information like your savings, checking, investment, and even mortgage accounts. In addition, don’t forget your insurance information! On the flip side, provide the location of non-financial information like birth certificates, social security cards, safe deposit keys, etc.

2. Create an emergency savings fund. Hopefully nothing happens to you, but in the off chance that it does you’ll have an account to help you out. Make sure you have at least six months of income saved that can help you if something unexpected comes up. If six months isn’t doable, save what you can!

3. Consider life insurance. If you work, you may have the opportunity to get life insurance through your job – which is a nice benefit. It’s often one or two times your salary, but it won’t follow you through life. Therefore it makes sense to purchase an individual policy. It’s not terribly expensive (a healthy 30-year-old typically pays around $13 a month for a 20-year, $250,000, level-term policy) and you’ll continue to be covered as long as you pay the premium. For an estimate of how much life insurance you need, give us a call and we’ll happily assist.

4. Give an insurance agent a call. Now that you’re engaged, it’s time to get friendly with your insurance agent. People don’t realize this, but it’s typically free to sit down and talk about your needs – again free of charge. If you don’t have time to come in a talk, give us a ring and we’ll answer any questions you have about your engagement, your future, and what insurance policies you can purchase.

5. Buy insurance on your ring. Putting insurance on your rings may seem unromantic, but there is nothing better than peace of mind. In order to insure your rings, you’ll need to provide the receipts and possibly an appraisal on the ring from a certified gemologist. No matter the value of the ring, having it insured will cover anything from theft and damage to accidentally dropping it in the garbage disposal.

 

Now that you’re about to marry your best friend, these few tips can provide you a simple direction for how to better plan your finances and insurance policies.