The reason you are purchasing the insurance and your circumstances. Are you married? Do you have children? Do you have a mortgage and other debt? Are you planning on sending your children to college? What about Final Expenses? Does your wife or husband work? Will they need any money to help them until Social Security for the minor children starts? All these things need to be taken into consideration. A good experienced life insurance agent will help you determine what your needs are and recommend a plan of action that is affordable.
Bottom line is, YOU determine how much life insurance you need, want and can afford.
Some people have large estates that require special financial and legal evalutation. You may need one or more trust documents and life insurance to provide estate liquidity.
Others have a financial interest in a business and succession planning that calls for life insurance to fund the business after you are gone.
The first step is to calculate your indebtedness: mortgage, auto loans, student debt and credit cards. Then add future obligations like your children’s education, weddings and your retirement.
Then there’s the human value equation. Human value is defined by the gross earning power of an individual over their expected lifetime; this should include Social Security benefits in retirement as well. That total earnings should also include an inflation rate, some underwriters use 3%. The total sum will give you an idea of the human value you can indemnify for life insurance purposes.
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Some people have large estates that require special financial and legal evalutation. You may need one or more trust documents and life insurance to provide estate liquidity.
Others have a financial interest in a business and succession planning that calls for life insurance to fund the business after you are gone.
Then there’s the human value equation. Human value is defined by the gross earning power of an individual over their expected lifetime; this should include Social Security benefits in retirement as well. That total earnings should also include an inflation rate, some underwriters use 3%. The total sum will give you an idea of the human value you can indemnify for life insurance purposes.