How much life insurance do I need?
How much life insurance do I need?
Buying the right amount of life insurance can sometimes be a difficult decision. There are three variables that must be taken into account. How do you want? What you need? How much can you afford? Usually the answer to all three questions are different.
Personally, I would leave my politics, one million dollars of life insurance beneficiaries, but realistically, I can not be able to afford it now. So the question ismust ask, is somewhere in between, what I need and how can I afford?
For the purposes of this article, I will use the example of a family of four, two parents with two children. Most young families to support a charge of mortgage debt, car payments and credit lines, maybe a couple of credit card debt, usually at least one student loan payments. Let's say your mortgage is $ 200,000, the car balance is $ 20,000, maybe $ 2,000 on credit line$ 2,000 credit card and a balance of $ 16,000 in student loan (s). This represents $ 240,000 in total debt. If death occurs early, you will probably like many others do not want the spouse to leave the burden of debt was paid. So perhaps you should consider insurance a minimum of $ 250 000 in some term life.
Have you ever thought of it as an adaptation fund? Say, you or your spouse died prematurely.What is the probability that the remaining spouse is able to start working again? Probably not so good. There were major adjustments. If anyone had a stay at home parents, now, would look after the children were? How easy it would be to help children adjust to the loss of a parent, if the remaining parent must get back to work? What if both were killed? Who adds to your children and those who could afford to absorb these costs? These are just somevery important issues to be resolved. Many of these problems are not the subject of this article. This discussion will focus only on financial need.
Suppose you earn $ 40,000 per year and your spouse, $ 30,000. So if you die, I want five years to clear your spouse enough? Hard to say. Everyone deals with death very differently. Let's with a period of five years of adjustment as an example. Multiplied by the annual income of the deceased spouse,another $ 200,000 of life insurance is needed. This is in addition to the $ 250,000 requested, take care to take all outstanding accounts.
The best and cheapest way to meet the liquidity needs with affordable Term Life Insurance coverage. For example, if every parent was 35 years, could be covered for each $ 500,000 each for a total of less than $ 50 per month. This is less than we spend on a cupCoffee and a muffin a day. Not that you're so easy to know the comfort that your family is financially secure?
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