This guest post is by Vaughn Anderson who writes for lifeinsurancenebraska.com. Vaughn has been helping people find the right type and amount of life insurance and health insurance for over twenty years.
How much life insurance do you need?
If you have a spouse or family that depends on your income, then you need life insurance. But how much do you need?
As you set out on the path to get rich slowly, you want enough life insurance to protect your family. But why spend more on life insurance premiums than you truly need?
Most insurance buyers just pick a number from thin air. With no solid reason they decide they should buy $300,000. Or $750,000. Either one could be right or both might be wrong.
Try a needs calculator.
A quick and easy life insurance needs calculator can help quantify your life insurance needs. The needs calculator gives you a rough estimate of a reasonable number for your particular situation. When you use the calculator you will know why you bought the amount of life insurance you own.
For simple family situations the calculator will take into account a few factors:
1. Final expenses such as funeral expenses and an emergency fund for your spouse.
2. The mortgage. If your spouse would be more secure owning the home free and clear, then provide money to pay off your home loan.
3. Other debts such as credit cards, auto loans, or student loans.
4. Money to be set aside for future school expenses for your children.
5. Income. If you were to pass away your income passes on too. Talk it over with your spouse and arrive at a monthly income he/she would need to live comfortably and how many years the income is needed. Take into account your spouse’s income if she/he would work.
Enter these numbers into the needs calculator to get a picture of how much life insurance you need, and how long you need it. Think about it for a bit and make changes until you are comfortable.
Don’t procrastinate. Buy what you need.
If it turns out you need more life insurance, talk with an insurance professional about the right type of life insurance for your situation.
Another option is to shop online. Many online sites let you compare rates, particularly on term insurance.
Some sites offer guidance on what rate category you may fall in; preferred plus, preferred, standard, preferred or standard tobacco user.
If your health isn’t good the options become more complicated and more important. Not all companies treat all health conditions the same. If you are unhealthy talk with an experienced insurance professional. Your wallet will thank you.
Special need family members may increase or lengthen your need for life insurance. Business ownership or estate liquidity requirements also modify your needs. These situations go beyond a simple needs calculator.
For your family, take the time to get a snapshot of how much life insurance you need. Put the snapshot to use by getting enough life insurance to protect your loved one’s security.