Life / Disability / LTC

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How Much Life Insurance Do You Need?


 

INCOME REPLACEMENT:

Your family will need a lump sum of money to replace the loss of income when a wage earner dies. 10-15 times the annual income lost is a good rule of thumb. The lump sum could be saved so that the interest produced would then be used as income. For example $100,000 earning 2% would only net you around $2,000 a year for your family.

HOUSING: If you would want your home paid off, you would need enough coverage for the remaining balance of your mortgage. If you rent, you might want to provide a number of years of rent for your family or a lump sum that could be used to purchase a home. 

SPECIAL NEEDS: If there is any large expenses that your family expects to incur in the future. A college education is usually the largest special need a family will need to plan for.

DEBTS: All the outstanding debt that you would want paid off. (Car Loan, Business Loan, Credit Cards, Student Loans ect.)

FINAL EXPENSES: The amount you would need for a funeral and final arrangments.

Now, after deciding how much you need for each area, add these amounts for the total amount of needs that you have.


 

The next step we take is listing your total assets.

CASH: the amount of money your family will have access to in 90 days if needed.

INVESTMENTS: Add the amount you have accumulated, that your family could use for living expenses. (Stocks, Bonds, Mutual Funds)

PRESENT LIFE INSURANCE: The total amount of life insurance you currently have.

RETIREMENT: If the company you work for provides you with life insurance, or would provide an income for your family.

OTHER ASSETS: Any additional cash your family would have access to.


 

Total amount of needs - Toal Assets = Amount of life insurance you need

 

 

 

 

 

 

 

 

 

 



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