I don't see life insurance as a "need" issue but rather a "want" issue. Conventional wisdom would have you go through a "needs analysis" where you decide on some criteria such as inflation, interest rate, minimum income needed, etc.
I prefer looking at it from a "human life economic value" position. In other words, what is the present value of all your projected future income? Insurance companies simplify this by using a "multiple of income" factor based on age. That is the maximum a company will issue someone.
I ask clients this simple question... "If something happens to you, how much of your income do you want to make sure continues to your family?" Many say "all of it" and others say something else. Whatever they say, we work from there.
The need for life insurance is to make sure your loved ones are taken care if something terrible happened to you suddenly. When you said your wedding vowels, you promised to take care of each other until death did you part. Life insurance is the one product that can keep that promise forever.
The general rule of thumb without going into an in depth needs analysis is to cover your debts and up to 10 times your income. This way if you died today, your family would be debt free and could invest the rest with a good investment program that your loved ones could live off of the interest and not touch the principle where your income would be replaced year after year even though you are gone.
Unless you are independently wealthy, life insurance is a must for every family. Use a trusted independent life insurance broker that can find you the best coverage at the best price for your unique situation.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Of course this is a question that has been asked for many years. I think that it is best to answer that question with another question, “Who do you love?” After that a follow-up question would be, “What do you want them to have if you are unable to be there to provide it for them?” Most people want their loved ones to continue to have food, shelter and clothing. They might have aspirations concerning higher education. All of these issues can be measured and a sum determined.
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I prefer looking at it from a "human life economic value" position. In other words, what is the present value of all your projected future income? Insurance companies simplify this by using a "multiple of income" factor based on age. That is the maximum a company will issue someone.
I ask clients this simple question... "If something happens to you, how much of your income do you want to make sure continues to your family?" Many say "all of it" and others say something else. Whatever they say, we work from there.
The general rule of thumb without going into an in depth needs analysis is to cover your debts and up to 10 times your income. This way if you died today, your family would be debt free and could invest the rest with a good investment program that your loved ones could live off of the interest and not touch the principle where your income would be replaced year after year even though you are gone.
Unless you are independently wealthy, life insurance is a must for every family. Use a trusted independent life insurance broker that can find you the best coverage at the best price for your unique situation.