How Much Life Insurance Do You Need?
Posted on September 11, 2013
There are several ways to go about determining how much coverage you need when you purchase your life insurance policy. One simple method is to buy coverage equal to five to ten times your annual income. Following this rule of thumb, if you make $50,000 annually, you’d buy a policy between $250,000 and $500,000.
Other methods are more precise and take certain aspects of your financial situation into consideration, such as the capital you’ve already accumulated, the liabilities you’ve accrued, and the specific costs you’d like your family to be covered for in the future.
When purchasing term insurance, you’ll have to determine how long you’d like to have the coverage in place. Maybe you want it in place until you can comfortably retire and don’t need to work any longer to support your family. Maybe you have kids that will be going to college so you want it to last until they have completed college.
One of the major benefits of term life insurance is its ability to protect your assets at an affordable price. Be sure to avoid buying a policy with premiums you may not be able to afford in the future. It’s better to buy a smaller policy with premiums you can comfortably afford than to buy a bigger policy that you have to let lapse because you can’t pay the premium.
As your life progresses, you will likely accrue greater financial responsibilities for your loved ones. Term life insurance can provide the money they need to help meet their expenses and maintain their standard of living. We know that is all you want…for your family to be taken care of even when you are no longer here to do it yourself.