Several factors go into knowing how much life insurance is right for you and your family. The goal is to keep your family living in their current lifestyle. Some things to look at include current debt, expenses, retirement savings, and current/future income.
Since there are many things to take into consideration, let’s break them down into three sections.
Family Needs – There would be immediate financial obligations should you pass away. These include final expenses, any unpaid medical expenses, outstanding mortgage and other debts. Next, you will need to determine how much income is needed to sustain your family on a monthly basis. What are your current monthly expenses? If you or your spouse is a stay-at-home parent, you may have extra expenses to accommodate for. Did you know that, according to Salary.com, the average estimated salary of a stay at home mother was $118,905 in 2014. This is just something to think about when reviewing expenses. Daycare, cleaning, food and other expenses would likely increase to accommodate that change.
Future Obligations – You must also think of any future financial obligations. College tuition and fees for your children is an important cost to factor into your planning. Perhaps you planned on paying for your daughter’s wedding. Maybe you would like to contribute to your spouse’s retirement and make sure that he or she is able to retire once your income has ceased.
Available Resources – Take a look at your current accounts. Do you have savings accounts, 401ks, IRAs, 529 college plans, etc? The value in these accounts all factor into the amount of life insurance that you would need.
This can all seem pretty overwhelming. Luckily, LifeHappens.org has a great online calculator that can help you determine how much life insurance to purchase. This is a great starting point on determining how much life insurance is needed.
Once you have gone through the online calculator to help determine the amount of insurance needed, your life advisor can help you find the most cost-effective life insurance program to cover your needs. Contact us or fill out a simple online quote today to learn more.