Life insurance is one of those topics we tend to avoid. Thinking about the end of your life can be uncomfortable — and this tough subject is easy to ignore, especially if you are in good health. However, life insurance can be an important means of helping to take care of your loved ones after you pass.
A life insurance policy can help your spouse or dependents maintain their quality of life after you are gone. Should you become terminally ill, some life insurance policies allow you to access a portion of your benefit for medical expenses. So, life insurance can be valuable for certain circumstances. However, it is important to know how much life insurance coverage you need.
You may assume that the life insurance policy sponsored by your employer will provide adequate coverage, but it may not. Don’t leave this important component of your financial plan to chance. Here is what you need to know.
If you have coverage from your employer, find out exactly how much money the plan will pay out. Be sure to read the fine print (and double-check who you have listed as beneficiaries on that policy)!
Many employer-sponsored plans pay out a certain multiple of your annual salary. While that insurance benefit may seem like a lot of money today, it can be spent faster than you think. Your family will need to cover their ongoing living expenses. Between mortgage payments, education costs, and other expenses, bills can add up quickly. Not to mention they’ll need to pay funeral costs — and possibly final medical expenses and estate settlement fees. They may also need additional funds set aside for future emergencies.
Take the time to identify and add up the possible costs that your loved ones may incur. Then, you can compare that amount to your employer-sponsored policy to determine how much additional coverage you may need for this stage of your life.
Life insurance can seem like a luxury item. And it is a fact that there are many policies with high-priced premiums. But we believe that there’s a plan out there for every person and every situation.
If you are older or have a health condition, you may have to pay more than a younger and healthier person. Still, it may not be as expensive as you think. Don’t just assume that the cost of life insurance is too high. Get the facts before you make a decision. The only way to know your cost is to shop around for a policy to find one that’s right for your situation and your needs.
An online article or a book might tell you that the amount of your life insurance policy should be a certain multiple of your annual salary (such as six, seven, or eight times your salary). The truth is the need for life insurance is a personal matter. Your life is complex. Multiplying a set of two numbers may not get you to the right answer. That is why it is best to have a conversation with a financial advisor.
The information described herein is distributed for informational and educational purposes only and is believed to be accurate but is general in nature. No guarantee can be made as to its accuracy or completeness. You should consult with your insurance agent to ensure that you have proper coverage. Any opinions stated herein are current only as of the date of original publication and are subject to change without notice. Neither WealthSource Partners, LLC nor its affiliates have any obligation to provide revised opinions in the event of changed circumstances. WealthSource makes no warranties and is not responsible for your use of the information described herein or for any error, cost, loss, or penalty resulting from your use.