Estimating Life Insurance Needs
When selecting a life insurance policy, it’s important to look at the facts. It’s not easy to take the time to do so, but a few minutes invested now can help you ensure that your loved ones are well cared for if the worst occurs. One of the key decisions you will need to make is about the amount of coverage that’s ideal for your family. The more insurance you purchase, the more expensive the plan. However, you’ll want to be sure enough coverage is in place to meet your family’s needs.
When considering life insurance needs, there are several things to consider. First, determine how long you feel your family will need financial support after your death. If you are the breadwinner for the family, you’ll want to cover out your salary for a set amount of time. This may be a year or it may be ten. It depends on what you feel they need.
- Estimate the length of time for which you hope to provide coverage.
- Determine how much your salary would be during that time.
- Consider additional amounts you feel are necessary, such as to cover child care costs so your spouse could work.
- Factor in inflation.
Next, consider what happens immediately if you were to die. Would your family have the financial support they need immediately to continue to make bill payments, keep the mortgage on track, pay for your final expenses and still meet other financial needs in the weeks before the life insurance pays out? Final expense insurance, a separate component of your life insurance plan, can provide a faster payout to meet these needs. Determine how much your loved ones need in that immediate timeframe of 30 to 60 days after death.
Next, think about debts.. Do you want your life insurance plan to pay off your debt and mortgage to alleviate some of these concerns? You may want it to be large enough to put money aside for your child’s college education. By taking the time to consider each of these components, you’ll be able to make better decisions for your family going forward.
We can provide a more personalized assessment. Call McDonald Insurance Group for more information on life insurance.