If your untimely death would cause financial turmoil for someone else, chances are you need life insurance. The good news–it’s never been easier to get it.
Who needs life insurance?
- Married couples: If your spouse relies on your income, or if you have shared debt, it’s wise to get life insurance.
- Parents: Raising kids is expensive. Life insurance can provide funds for their upbringing if someone else must raise them. It can also provide funds for future life events like education expenses.
- Business owners: Life insurance proceeds can be used for a business partner to buy out your share of the business if you pass away.
How much life insurance do I need?
Even if you already have life insurance, read on.
I see a lot of people who have life insurance but are underinsured. Being underinsured means you have too little death benefit for your situation.
I think this happens for a few reasons:
- Your group policy at work is capped: A lot of people get their life insurance only through work. Often, the amount is limited to one or two times your annual salary.
- You’re using a rule of thumb: A popular rule of thumb is to get a policy worth 10 times your salary. This is a good starting point, but should be examined with your situation.
- You set up your policy a long time ago: Life insurance is a “set-it-and-forget-it” type of thing. But if you bought a policy years ago, it might not meet your current needs.
The best way to determine how much life insurance you need is to work with an advisor to calculate the amount based on your situation.
An advisor will calculate your recommended death benefit based on a number of variables:
- Years of lost income your spouse needs to replace
- Rate of return received on the life insurance proceeds
- Amount of Social Security Survivor’s Benefits your spouse and kids will receive
- Future large expenses
- Cost of living inflation
Going this route is much more effective than relying on rules of thumb or the amount of insurance you can get through work.
Plus, it doesn’t cost you more to work with an advisor. Working with an advisor or going straight to the insurance company will cost the same! Why not work with an expert who can not only determine the amount of insurance needed, but also which insurance company to use!
Don’t guess—use this calculator to find out
We’ve made this calculator available so you can find out how much life insurance you really need. Don’t worry—if you have any questions, one of our advisors will follow up with you.