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Life Insurance
Products
Things to consider......
Why
Do I Need It?
What
Kind of Life Insurance?
Insurance
- A Vital Tool
Benefit
Riders
How much Life Insurance is right for
you?
How much coverage should you own
personally, not counting group term coverage? With
so many people frequently changing jobs these days,
many are learning that owning and controlling their
own life insurance policy has many important advantages.
In addition they are often surprised to learn that
they have been significantly underinsured.
Traditionally, individuals tend to
buy life insurance in round numbers — such as $100,000,
$250,000 or $500,000 — or using the general rule
of purchasing 8-10 times their household income. Few
actually try to determine the correct amount to purchase.
While doing so is a relatively simple process, it can
be uncomfortable for some because it involves thinking
about death. Given the importance of this issue to survivors,
the best solution is to move beyond that discomfort
and plan accordingly.
Determining What You’ll Need
Consider family needs within the first
few months of your death. Funeral expenses, administrative
costs and other immediate expenses can be shocking.
In addition, clearing up unpaid bills or revolving debt
like credit cards or consumer loans is often necessary.
Determine how much will be required
to pay off any remaining mortgage balance on your primary
residence.
Providing an education fund for your
children is also critical. There are many schools of
thought regarding this, but you must consider how much
money you would like to see allocated for your children’s
education in case of your death.
The final issue is often the largest
— income replacement. If you have taken care of
the above-mentioned needs, most studies indicate that
a typical family can maintain its standard of living
on 60-75 percent of pre-death household income. While
it is a personal choice, you must consider whether the
beneficiary will live off the principal paid by the
policy or the income it generates through investments.
It is also important to consider the length of time
this money will cover. Most families decide that this
should last at least until your children are out of
college.
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