A life insurance policy provides the financial security your family needs when you are no longer around. The amount of life insurance you need can vary depending on several factors. Below we will go over how much life insurance you really need, and what can affect the amount you provide.
A good rule of thumb to go by is getting enough life insurance that equates to 10 times your income plus any future expenses that your family members will have. If you like numbers, then here is a great life insurance calculator you can use to get a basic idea of how much you need.
Possible Expenses to Account For
- College Attendance
- Funeral Expenses
- Family Emergency Fund
- Future Children
When deciding how much life insurance to get, consider that the cost of living has risen substantially in the last 20 years. Your decision can alter the financial stability of your family, so keep in mind what the dollar is worth today, will not be what it is worth down the road.
Think About Yourself
Not only is life insurance important for your family, but it is also important for your wallet. There may be situations where you have a hard time deciding if you really need life insurance. You may fall into one of these categories if you are second guessing a life insurance policy:
- Young & Single
Life insurance may be another expense to you, and if you are having a hard time providing for yourself then why would you need life insurance in the first place? Well luckily there are more affordable options since life insurance itself comes with many different plans. Providing for your family doesn’t have to end when you are gone.
Being young and single you may have other debts and expenses you want to cover before jumping into an insurance plan. Life Insurance does not have to feel like a waste, your future is subject to change at any moment. If you are Type A, or just enjoy having a back-up plan, then getting a life insurance policy now is a wise choice. You will read below why it is important to have a life insurance policy being the age that you are.
Employees may receive a type of life insurance plan called “group life insurance”, through their employer. However, as with other benefits employers provide, the more specific needs you have may not be met through this plan.
Never Too Young
You’ve landed on this page because you may be considering a life insurance policy. How much life insurance you really need can vary depending on your age. The best time to purchase life insurance is as early as you can. The older you are the more life insurance companies will charge. The rate people in their 50s can expect to pay is 12% more every year in premiums if they wait. If you are in your 40s the rate increase is 5-8%, so almost half of what people in their 50s will pay.
Know Your Type
Life insurance comes in many shapes and sizes. What you need to look at is what kind of coverage you want to give your family, and how much you can afford. There are 3 main life insurance policies you will want to know:
- Term Life Insurance
- Universal Life Insurance
- Whole Life Insurance
With the variability in options, you can decide which one would be best for you and your family. Depending on the policy, it can give you control over the benefits your family will receive after you have passed.
Because life insurance choices vary from person to person it is always wise to ask a life insurance specialist. With an expert, you get more personalized recommendations and local aid in your immediate area. You may have used the calculator and gained some basic knowledge from this post, but directly contacting an expert will answer more specific questions.