Life insurance is used primarily be used to cover the loss of your income stream for your dependents if you should die.
There are many other reasons to own life insurance, but for young families it’s for protection. If no one is relying on you for support then you probably don’t need much life insurance if any.
If you are 40 and single with no dependents you don’t need a lot of life insurance, maybe enough to bury you. But if you are 40 and married with 3 small children to educate, a mortgage and a spouse working part time you need a lot of life insurance.
If you should die tomorrow who or what will provide for your family? You need enough life insurance to cover the loss of your income to your family. How much will that be? Do you want to send the kids to college? That could be $100,000 each even if they go to UMASS, so that number gets factored in.
Do you want the mortgage paid off? Add that in also and let’s say its $250,000. Do you want to replace some of your lost income to the family until the kids are grown? The youngest is 5 so that will be 17 years until she is finished with college. So you will need to provide for at least 17 years of income.
Adds up quickly! With just those three requirements it could easily be $750,000 of life insurance you will need. Now if you wish to provide for your spouse the rest of his life that could indeed push you to a $1 million policy. This is a rough guesstimation on my part.
Spend some time doing a needs analysis to get a more accurate picture of the dollars needed. Also available on my website www.deelee.net is a worksheet to help you figure out how much life insurance you need.
Life insurance is often thought of as a luxury item in the budget. If someone depends on you and you want to take care of them, you need to think seriously about purchasing life insurance.
Term life insurance is really cheap. My personal preference is to buy term life insurance for you are buying just life insurance. Life insurance premiums have actually decreased because the insurance industry has figured out that people are living longer.
The cost of term insurance does increase every year unless you buy a level term policy that may run for 10, 20 or 30 years. Buying a 20-year term life insurance policy may give you the coverage you need if you have a young family and want to provide protection until they are in college.
I did some research and a healthy 40-year-old male non-smoker can get a $1 million of life insurance for as little as $67 a month. And a 40-year-old female would pay $51 a month. Check out the following sites for quotes: Intelliquote.com and Selectquote.com.
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Monday July 14, 2008 - Insurance: Life
Life insurance is used primarily be used to cover the loss of your income stream for your dependents if you should die.
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