It can be difficult to figure out just how much life insurance is needed.\u00a0 There’s always the push from insurance agents to purchase a large policy.\u00a0 Although it is important to protect your family, you must be mindful of choosing a plan that will remain affordable. Many families know that they need life insurance in the event of an untimely death. However, these same families are unaware of the factors that play into purchasing the right amount of coverage.<\/p>\n
Here are some methods you can use to determine how much life insurance you may need.<\/p>\n
Methods:<\/strong><\/p>\n For individuals who are looking for insurance to replace their earnings, use the following:<\/p>\n Multiply the yearly income by a determined time number.\u00a0 (If you’re wanting to replace income for 5 years then use 5; 10 years:9 and 20 years:15).<\/p>\n You can also use a method based on your needs and not your future worth.\u00a0 It’s a bit more accurate and allows you to put aside enough but not too much.\u00a0 There are several steps involved with this method, but it’s an easy equation.<\/p>\n 1.\u00a0\u00a0 You must first calculate the total amount of your financial resources.\u00a0 This would include paid up investments, any existing life insurance arrangements, income, savings (less 3 months of spending), and social security benefits (if applicable).\u00a0 You then have to calculate the amount your spend per year.\u00a0 Include all your living expenses including transportation fees and expenses for children.<\/p>\n 2.\u00a0\u00a0 Determine how long your family can manage without your income.\u00a0 This is determined by dividing your total resources divided by your estimated spending.\u00a0 This will be the number of years your family can go without your income.<\/p>\n 3.\u00a0\u00a0 Calculate how many years there are remaining to support your loved ones.\u00a0 Boys are averaged at 25 years of age for support and girls are averaged at 22 years of age.\u00a0 Using these averages, for each child, calculate how many years before they come of this age.\u00a0 The result of this will be noted as figure \u201cA\u201d.\u00a0 You should then figure the average life expectancy of the parent.\u00a0 Subtract figure \u201cA\u201d from the year’s of the parent’s life expectancy.\u00a0 The result will be used in the next step.<\/p>\n 4.\u00a0\u00a0 Take the result from step 3 and multiply it by the yearly expenses. \u00a0That’s how much life insurance is needed.<\/p>\n Use this formula to help you get just enough life insurance. Once you have the number, you can chose to get more or less insurance depending on what you can afford. There are a number of options that you can chose from. If you are having trouble deciding which plans will work best for your situation, talk with a financial advisor before your insurance broker. They will give you great advice and help you make a great decision for your family.<\/p>\n","protected":false},"excerpt":{"rendered":" It can be difficult to figure out just how much life insurance is needed. There’s always the push from insurance agents to purchase a large policy. Although it is important to protect your family, you must be mindful of choosing a plan that will remain affordable. <\/p>\n","protected":false},"author":2,"featured_media":138,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-137","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insurance-articles"],"_links":{"self":[{"href":"https:\/\/www.greatlifeinsurancegroup.com\/resources\/industry-articles\/wp-json\/wp\/v2\/posts\/137","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.greatlifeinsurancegroup.com\/resources\/industry-articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.greatlifeinsurancegroup.com\/resources\/industry-articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.greatlifeinsurancegroup.com\/resources\/industry-articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.greatlifeinsurancegroup.com\/resources\/industry-articles\/wp-json\/wp\/v2\/comments?post=137"}],"version-history":[{"count":3,"href":"https:\/\/www.greatlifeinsurancegroup.com\/resources\/industry-articles\/wp-json\/wp\/v2\/posts\/137\/revisions"}],"predecessor-version":[{"id":141,"href":"https:\/\/www.greatlifeinsurancegroup.com\/resources\/industry-articles\/wp-json\/wp\/v2\/posts\/137\/revisions\/141"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.greatlifeinsurancegroup.com\/resources\/industry-articles\/wp-json\/wp\/v2\/media\/138"}],"wp:attachment":[{"href":"https:\/\/www.greatlifeinsurancegroup.com\/resources\/industry-articles\/wp-json\/wp\/v2\/media?parent=137"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.greatlifeinsurancegroup.com\/resources\/industry-articles\/wp-json\/wp\/v2\/categories?post=137"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.greatlifeinsurancegroup.com\/resources\/industry-articles\/wp-json\/wp\/v2\/tags?post=137"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}