Analyzing Your Need For Life Insurance
“Do I need life insurance?” is an age-old question, but the answer isn’t clear for some. Do you have a mortgage or other debt? Does someone count on you for regular ongoing support? If you answered “yes” to any of these, you may need life insurance.
But for some people, you need to ask more questions to get a clear answer to this question. Consider your answers to these questions:
1. Will my insurance, current savings, or partner’s income be able to pay my final expenses? No one knows how they will pass on, but consider that burial will cost around $10,000. That’s a lot of money that some people might not have.
2. Can I sell my house for enough to pay off my mortgage? The more you pay down your mortgage, the less money your family needs to be able to afford the home. Having a $500,000 policy may allow your partner to pay off the mortgage and not worry about housing costs. It might save them from having to sell.
3. How much more do my kids or dependent children need to complete their education? Do you have kids in private schools that would require continued payment? Leaving behind enough money to pay for their education through high school is ideal. It’s nice to consider college as well. But there are scholarships and student loans available that can help your kids.
4. Will my partner have enough savings to live off of when he or she retires? If he or she was a stay-at-home parent, they would be better off with a lump sum that they can save for the future. If they worked, they might have enough in their own investments.
5. Are my current savings enough to pay any estate taxes or expenses related to settling my estate? Tax laws are always changing, but you can plan to spend at least some money to execute your will.
6. Can my partner and dependents live on the remaining income without touching investments? When the higher income earner in a household passes away, the remaining family members need to adjust to a lower standard of living. Life insurance money could help them bridge the gap without being too uncomfortable.
If you would benefit from life insurance, get at least 10 times your annual income in coverage. Your partner can then invest it and pull a modest amount out each month to help with expenses. For further questions about coverage, our website can help you get answers. Or, contact one of our agents today.