There has probably been a time or two when something happened to yourself or someone else that left you thinking, I wish I had done that. And adding a little slap in the face is the fact that you were probably told to do that thing several times by family members or friends.
But sometimes you do not get a second chance and you do not have the opportunity to wonder What if?
It is a horrible thing to think about, but unless you are the loneliest person in the world or have managed to hide the fountain of youth in your backyard and elude the press, you will need to consider obtaining life insurance.
The article, “Life Insurance - How Much Is Enough? Here Are A Few Things To Consider” written by Joe Stewart and posted on ezinearticles.com, provides essential information that will help ease some of the confusion involved with deciding how much life insurance is necessary to provide for a family.
So, you have come to a point in your life when it is now selfish not to get life insurance coverage. After all, it is not for you but rather to financially protect your loved ones in the aftermath of your unexpected death.
There are a number of formulas to determine how much coverage your family will need. A popular concept is to take your current annual salary and multiply it by five or 10 to arrive at the amount you should be covered for. But in the end, the amount of life insurance coverage you need will always depend on your family’s lifestyle and other financial obligations.
First, it obviously matters whether you are married or single.
“Single people would need coverage for their final expenses, such as paying for their funeral. This alone can run up into the $7,000-$10,000.00 range these days, with most of that cost being for a casket. This can be a huge burden for a family member that ends up with the remaining bill of an uninsured person, be it parent, child or sibling. They not only have to go through the grief of a lost loved one, but also the added financial burden that was unexpectedly placed on them.”
You will also have to consider if you do or may have personal debt by the time of your death. You do not want to leave a family member a list of accruing bills.
“There are many different variables to consider for married couples. Do you have children? If so, how many? Do you want them to be able to attend college? What are their ages? Are you the breadwinner (primary source of income) in your household or do you and your significant other share expenses? Do you currently have a mortgage or do you rent? Do you have outstanding debt? If so, how much? What is it for? Is it secured or unsecured?”
Depending on the size of your immediate dependant family and their needs, coming up with a dollar amount they will need to live their current lifestyle is difficult.
Do not forget to consider multiple other expenses such as utilities, food, random household items (toiletries, cleaning supplies, ect.), car and other insurance premiums, savings, gasoline, clothing, school expenses and an emergency fund that could help repair a car or fix a leaky roof.
Once you add up all of these items, estimate what they would cost per year. Then you have to consider how long your family may need to use this income (usually at least five years). Lastly, you will need to add in estimated inflation, perhaps a yearly percentage that can be figured out by an LEI financial services coach.
Do not get life insurance without considering all the possibilities and making sure everything in the policy is accurate because if there is something not listed or the finances are too low you will not be around to correct it.
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