How much life insurance you should buy depends on what you want the life insurance to do.
If your need is to cover a specific purpose, for example to leave your family well positioned in the event of your death, then the amount of insurance should include enough funds to replace your income (human life value), cover your debts, estate costs, establish an emergency fund and more. If family protection is your objective, your insurance agent can help you with the calculations. Many insurance companies offer online calculators to give you a point of reference.
Life insurance can play an important role in your financial and retirement planning. An independent life insurance broker can help you find the right policy at the right price.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
The simplest rule of thumb to figure a face amount of life insurance is to take all of your debt (mortgage, auto, credit card, etc) plus the cost of educating your children (if you have young children) and add it together with ten times your income.
For example, if you owe $200,000 on a mortgage, $20,000 in other debt and the cost of educating two young children is $80,000 each. You earn $75,000 per year. You would need to have $1,130,000 face amount. This would leave your family debt free, children's college fund paid and $750,000 to invest for the income replace of $75,000 per year. I recommend using an experienced advisor to help set up the proper amounts with the proper coverage. But this is a good rule of thumb for the "do it yourselfer".
President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
This is the $64,000 question, isn’t it?
(And the answer, by the way, is not $64,000 of coverage; nor should you have to pay $64,000 in premium. But some people do, and it is well worth it.)
That is a very important consideration. Life insurance premium is money well spent.
Each dollar of benefit literally cost pennies. If you get the best rate available, then it costs you a few pennies. If you qualify for a higher premium, that it costs you a few more pennies. In either case, it is an extremely economical way to make sure your heirs and beneficiaries get all the money they need, exactly when they need it.
Having said that, I have a very simple philosophy when it comes to determining the face amount.
When it comes to taking care of your family, be generous. Losing you will be an incomparable trauma for them. Financial stress and strain would really hurt them. Even having to reduce their standard of living somewhat will cause distress.
Give them enough money to live well. It won’t take you too much time to calculate just how much money would be needed to accomplish that.
When it comes to leaving money to your favorite charity, be prudent. A life insurance benefit could represent a substantial donation to them. They need to have demonstrated a high measure of accountability and responsibility in managing their finances, to qualify for a great gift.
Give them enough money to make a difference and take a few good strides towards fulfilling their purpose. And considering spreading your wealth around to various good causes.
When it comes to taking care of your business obligations, be exact. Have your accountant crunch the numbers to make sure your partnership agreement is adequately funded. Determine the value of your key people and make sure your company is indemnified against their loss. Account for any and all debt, and make sure there is enough coverage to take care of it.
Your business should be able to flourish without you. If you have built it correctly, new leadership should be in place, and the money should be there, for the show to go on. That is successful entrepreneurism.
All the formulas are correct.... Yet I'd like to say... BUY AS MUCH AS YOU CAN AFFORD.
Think about it. You can trade $20 a month for $50,000, $100,000, maybe even $200,000 or more!!!
You can give up those 2 extra beers, that pair of shoes, or that _______. You fill in the blank.
No one ever says, "My spouse had TOO MUCH life insurance to help take care of the kids and myself. I wish he would have spent that $20 a month on pizza and ice cream for all of us."... BUY AS MUCH AS POSSIBLE. If you have any questions, reach out. - gravy.
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If your need is to cover a specific purpose, for example to leave your family well positioned in the event of your death, then the amount of insurance should include enough funds to replace your income (human life value), cover your debts, estate costs, establish an emergency fund and more. If family protection is your objective, your insurance agent can help you with the calculations. Many insurance companies offer online calculators to give you a point of reference.
Life insurance can play an important role in your financial and retirement planning. An independent life insurance broker can help you find the right policy at the right price.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
For example, if you owe $200,000 on a mortgage, $20,000 in other debt and the cost of educating two young children is $80,000 each. You earn $75,000 per year. You would need to have $1,130,000 face amount. This would leave your family debt free, children's college fund paid and $750,000 to invest for the income replace of $75,000 per year. I recommend using an experienced advisor to help set up the proper amounts with the proper coverage. But this is a good rule of thumb for the "do it yourselfer".
(And the answer, by the way, is not $64,000 of coverage; nor should you have to pay $64,000 in premium. But some people do, and it is well worth it.)
That is a very important consideration. Life insurance premium is money well spent.
Each dollar of benefit literally cost pennies. If you get the best rate available, then it costs you a few pennies. If you qualify for a higher premium, that it costs you a few more pennies. In either case, it is an extremely economical way to make sure your heirs and beneficiaries get all the money they need, exactly when they need it.
Having said that, I have a very simple philosophy when it comes to determining the face amount.
When it comes to taking care of your family, be generous. Losing you will be an incomparable trauma for them. Financial stress and strain would really hurt them. Even having to reduce their standard of living somewhat will cause distress.
Give them enough money to live well. It won’t take you too much time to calculate just how much money would be needed to accomplish that.
When it comes to leaving money to your favorite charity, be prudent. A life insurance benefit could represent a substantial donation to them. They need to have demonstrated a high measure of accountability and responsibility in managing their finances, to qualify for a great gift.
Give them enough money to make a difference and take a few good strides towards fulfilling their purpose. And considering spreading your wealth around to various good causes.
When it comes to taking care of your business obligations, be exact. Have your accountant crunch the numbers to make sure your partnership agreement is adequately funded. Determine the value of your key people and make sure your company is indemnified against their loss. Account for any and all debt, and make sure there is enough coverage to take care of it.
Your business should be able to flourish without you. If you have built it correctly, new leadership should be in place, and the money should be there, for the show to go on. That is successful entrepreneurism.
Think about it. You can trade $20 a month for $50,000, $100,000, maybe even $200,000 or more!!!
You can give up those 2 extra beers, that pair of shoes, or that _______. You fill in the blank.
No one ever says, "My spouse had TOO MUCH life insurance to help take care of the kids and myself. I wish he would have spent that $20 a month on pizza and ice cream for all of us."... BUY AS MUCH AS POSSIBLE. If you have any questions, reach out. - gravy.