Nearly every financial planner will tell you that at least some level of life insurance is necessary in order to cover final expenses, or assist your loved ones with living expenses if something were to happen to you. The question is how much life insurance do you really need?
What is Your Debt Level?
You want a life insurance amount that reflects the complete payment of the debts you have, your burial costs, and perhaps a little extra over that amount. The more you can keep debt down, the less life insurance you need.
How Many Dependents Depend on Your Income?
If you have a spouse and children that depend on your income to make ends meet, you need to consider how difficult it would be if the income suddenly came to a halt. You should consider having an insurance policy that covers at least three years worth of salary.
What is Your Age?
Your lifetime earning potential also figures into what you should consider in life insurance amounts. Young people with young children should carry higher policies than an older individual that has paid down debt. Insurance funds will have to stretch for a longer period if your child loses you at a young age.
How much do you want to leave Your Benefactors?
Some people plan to leave kids a specified amount to help cover the cost of tuition in college. Others want to leave a parent or spouse a small nest egg of funds. Adjust the amount of your policy to reflect these wishes.
Health Conditions and Premium Amounts
The cost of insurance premiums will vary depending on the type of life insurance you want, age, whether you smoke, or have any major health conditions. You may have to adjust your desired amount to find a premium amount that is the most affordable.
It’s a good idea to have a life insurance policy that can help with expenses for unexpected events. Find out what products are available in life insurance Elk Grove CA residents depend on to keep their families from carrying the burden of expenses when the time comes.