Tuesday, November 13, 2007

Tips for deciding how much life insurance you need.

Tips for deciding how much life insurance you need.

How much? How long? Those are the two biggest questions when it comes to buying life insurance. This article gives you some tips for answering the How Much question and a simple needs calculator. See also “Tips for deciding how long you’ll need life insurance.”

By Mary Pollman – SelectQuote

There are very few things in life that don’t have limits. You love spending time with your children. But 24 hours a day, every day, would be too much of a good thing. Two hours a day would be too little.

The same goes for Life Insurance. What you want is balance — the proper type and the right coverage for each stage of your life. Then Life Insurance can be the most affordable financial security you can give your family.

Most people have no idea how much Life Insurance they need. Questions to answer are how much income would you have to replace if a breadwinner died? How much is your mortgage? What debts do you have? What will education and living expenses be until your last child finishes college? What are your assets?

There are several “rules of thumb” for how much Life Insurance you should have. Financial expert Suze Orman says you need 20 times your annual salary. While this might take your breath away, here logic makes sense. Let’s say you make $50,000 a year. Today, most safe investments pay a maximum of 5% a year. So it would take $1,000,000 in insurance to replace that $50,000 a year.

Of course, your personal situation could be markedly different. L.I.F.E. (
http://www.life-line.org/build/insurance_needs_calculator/index.php?pt=lfinc ) has a handy calculator that will give you an objective view of just how much coverage you need.

Also, a good life insurance agent who can really get down to the details of your situation. This does not require someone coming into your home. There are many independent companies with licensed agents online who can provide you with expert counsel by phone at no cost.

About the author. Mary Pollman, CLU, has been writing about life insurance, long-term care insurance and annuities for more than 20 years. She has contributed to insurance publications, websites, consumer product literature and agent training. Mary held senior management positions in communications and marketing with two life insurance companies. She is an editorial advisor to SelectQuote.

We can show you a better way to insure your mortgage. A SelectQuote Licensed Expert can show you excellent alternatives to mortgage life insurance: level-premium term life insurance policies – with and without return of premium – from the highly rated Term Life Insurance companies we represent. Quotes are free. Call toll-free 1-888-739-7965. Or go to our website, www.selectquote.com/home9 .

1 comment:

Sean said...

My grandma had a globe life insurance
policy for her children when she died a few years back. Her policy was worth 15 times her last salary. After funeral expenses, the benefits were split amongst my mother and her siblings. thank god they had plenty to go around, even after the funeral and burial.