It’s a topic a lot of people don’t like to dwell on, but the fact is we all have expiry dates. If yours happens to be too soon, then you’ll be happy you’ve done what you can to help your spouse, kids and others survive without you.
At some point you have to buckle down and make arrangements about your life insurance.
When it comes to life insurance, you need to consider what amount of life insurance will be sufficient to cover your family’s needs should something happen to you. A single person in their 20s may not have dependents, yet buying insurance is better the younger you are. When you’re older, you can buy term insurance for those years where you need to ensure your dependent’s needs.
The cost of living is actually shockingly high and rising. Do you keep track of how much money you spend during a year? A lot of people don’t want to know, yet you really need to think about this. What amount of insurance is needed to cover everything your surviving dependents will need?
The answer to that isn’t always clear cut but it’s big numbers over the next 20 years. The amount of your policy depends on your income, debts, who you need to support, and on your age. It might range normally from $100k to $2 million.
So, if you’ve avoided the topic altogether, let’s make it easy to think about by reviewing what you need.
1. Income: To survive, your dependents may need at least 50% of your normal pay. You may want to aim for 75%. Adjust it down or up according to how many kids you have and what inflation is expected in the next 20 years. If your spouse is working, you may only need 30% to top up their income. 30% x $50k x 20 years = $300,000
2. Expenses/Debt: You may want to pay off most or all of your current home mortgage. These days, that’s a substantial amount, yet your surviving spouse may not be able to afford your home. Remaining mortgage: $350,000
3. Long Term Needs: Your kid’s education, house repairs, maintenance, and vehicles, can be very costly. $500k for 20 years is not overstating it.
4. Tax Management: your surviving family could be hit with a variety of taxes including inheritance tax.
A knowledgeable insurance broker can help you work through your life insurance needs and answer your questions. We offer term and permanent life insurance products and it’s just a matter of matching you to the right policy.
Now that you understand the larger issues, you can begin drilling down on the details and get the amount of coverage that’s right for you. A quick phone call and a visit, and you’ll have this matter taken care of. Then you can relax knowing your family is financially covered.
Get to know more about the Cornell team now. We’re looking forward to assisting you with any questions you might have on life insurance.