There are three categories you need to consider when trying
to determine the minimum amount of life insurance death benefit you and /or your spouse need: YOUR INCOME,
YOUR EXPENSES, YOUR ASSETS.
YOUR INCOME
What is the
annual income your family would need to maintain their current standard of
living?
(60% - 70% of total income is
usually required.)
Keep in mind, additional money
needed to pay for someone else to do the things you do to help care for your
family – group health insurance, take children to appointments and other activities;
household maintenance – laundry, cooking, cleaning, mow the lawn, etc.
A spouse that stays
home and provides for the everyday needs of the family may not provide “income”
but how much would it cost to hire a full time, live-in caregiver?
Other annual income (Social Security, Spouse income, etc.)
your family would receive?
How many years do you want to provide this income?
YOUR EXPENSES
Estimate
your Final Expenses – funeral, medical expenses, etc.
Outstanding debt including your mortgage, credit cards and
other loans.
Total
college expenses for your children.
(Average based on the 2009-2010
The College Board:
Private College $156,112, Public in
State $77,522, Public out of State $123,664)
YOUR ASSETS
Savings,
investments, etc.
(Money markets, CD’s, Stocks, bonds
mutual funds, etc.)
Retirement
savings accounts
(IRA’s,
401(k)s, pension and profit sharing plans)
Current
Amount of Life Insurance
(include group insurance as well as
individually owned insurance)
You can find many life insurance needs calculators on the
Internet – look for one that has built in inflation and cost of living
adjustments.
Once you have an idea of the amount of coverage you need,
contact your life insurance agent to review your coverage and find the best
options to meet your needs and your budget.
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