How To Correctly Evaluate The Amount Of Life Insurance You Need
How much life insurance do you need? It sounds a bit weird when you think about it. How could you determine the amount of life insurance? It is, after all, LIFE insurance, right?
Well, life insurance, as you are about to discover, is not something that can’t be measured into “portions”.
The actual question to answer prior to “How much?” is “Why?” Understanding WHY you need life insurance in North Chelmsford, Tewksbury, Tyngsborough, or Westford will help you establish just HOW MUCH of it you need. So let’s see…
Why do you need life insurance?
There are three main reasons why people consider creating life insurance:
- Because of the tax benefits
- Because they look at it as an investment
- Because they care about their family and what would happen to them in their absence
If you are thinking about having life insurance for the first two reasons, then the policy amount is almost irrelevant. The sum you are paying will not make a big difference in the way you live your life.
But if you have life insurance because of reason number #3, then the question “How much?” suddenly makes a lot more sense.
What will happen to your dear ones in your absence?
Good question, isn’t it? From your wife/husband living a good life to your kids going to college and graduating, you need to take all this into consideration.
This is why it is wise that your life insurance should cover at least 8 times the amount of your current income. That is, if you are now 30 of age, you should insure yourself at 8 times your annual wage.
Here are some other points to take into consideration:
- Your liabilities
- Your age
- Your current savings
- Your lifestyle and the expenses it implies
- Your age
- How many people depend on you