life insurance

Critical Questions to Ask to Determine How Much Life Insurance You Need

March 17, 2022

March 17, 2022: Life insurance is often cited as one of the best investments a person can make, but there are a range of variables that determine just how valuable it can be. You need to choose whether you’re applying for a term life policy or a whole life policy, for example, and you need to consider exactly how much coverage you want, too. The latter of these questions is one of the most important factors in selecting the right policy, but how do you find the answer? What needs should be considered when determining the amount of life insurance coverage you need? Read on to determine how much life insurance you need.

You’re a Parent

What are 5 factors you need to consider when purchasing life insurance? One of the first is whether you have kids to consider. If you are a parent, investing in life insurance is a great way to make sure that they’ll be provided for if you pass away. How much life insurance you need depends on how many kids you have, what expenses they face, and what future expenses you’d like to provide for — think about college, weddings, and other major life events. Consider the cost of these expenses to calculate the coverage you need.

You’re the Breadwinner

Even if you live in a two-income household, your family likely relies on your income substantially. If you’re the breadwinner, you need to be realistic about how much you contribute. To do this, you must account for all of your family’s expenditures, including housing, health care, education, and daily living expenses. In addition to these costs, you should take any future costs into account, too — expenses such as assisted living facilities or in-home care, if it becomes necessary. With these costs tallied up, you should calculate the portion that you are responsible for.

You Need to Replace Income

Your calculations will likely reveal that you’re responsible for a major portion of your family’s expenses. Without your income, they may be unable to maintain their standard of living. To this end, you must calculate the percentage of your income that must be replaced in order to find how much life insurance you need. If you provide 100% of your family’s expenses, for example, your life insurance policy should include coverage that sustains this level of income for as long as you see fit.

You Have Debts

Many people do not account for their debts when calculating life insurance, or they mistakenly assume that debts will be written off when they pass away. Although some debts are forgiven upon death, many aren’t, and those that are left can make a substantial dent in whatever assets you leave to your beneficiaries. To offset this, you should invest in enough life insurance coverage to ensure that your debts can be paid.

About 1891 Financial Life

At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs.

Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.