Estimating Your Life Insurance Needs:
There are Whole Life and Term Life Policies.Whole Life is expensive and based on assumptions, but
often contains investment components that may end up profitable. Term Life is set to match the terms of
your needs. You want the policy to last as long at it takes your kids to leave the home, or your retirement
income kicks in. But even with retirement income, it's advisable to keep at least some form of life insurance.
Make sure you purchase enough term coverage to fill your needs. A $500k Policy can be as low as $15/month.
For an easy way to estimate coverage, here is an example: A lot of people don't know how much insurance
they need. To give you some insight, imagine a 35 year old father of two. Imagine he has an income of $50,000/
yr. We can assume he will work for at least another 20 years. Even if he never receives a raise, he will
earn $1,000,000.00. It's not fun to think about it, but if he weren't there, that is 1 million
dollars that his family would need to replace because they count on him. Take your expected income,
add on a fund to pay for college, and enough insurance to pay off your mortgage and you can see that having
your responsibilities covered becomes very important.
- Do not skimp on estimating coverage. Rates are at historic lows and it's not worth cutting corners.