How Much Life Insurance Do I Need? Maybe that is the wrong question!
Who gets left holding the financial bag if your life suddenly ends today?…your spouse, your kids, your business partners? Let’s keep this to your immediate family. Question: Who pays the bills when you can’t…because you are dead…which bills?…well, rent or mortgage, power/water, groceries, car loans, roof/repairs to your home, credit card balances, ISP/cable TV provider,health insurance, house insurance, your bookie…the list seems endless. Grab your check book and add up each of the past few months’ bills you’ve paid…those don’t go away just because you, as Elvis, have left the building.
The problem is that your family will need a resource for cash…because you are no longer able to add to the kitty every payday. Today, look into your resources, money in the bank/checking account..perhaps an IRA or pension plan where you work, a personal investment account, equity in your home, credit cards, assets you own and can sell if necessary. Most of us are worth a bit more than expected…but also,many of us could not come up with a thousand dollars in cash on short notice.
Here is an example to remember: One Million dollars invested to return 5% per year net after taxes, creates a yearly income stream of $50,000.00. Can you buy a life insurance policy that pays your family $1,000,000.00, Income Tax Free, upon your death…$1,000,000.00 lump sum to be placed with a qualified financial adviser? Maybe so, maybe not…might be more affordable than you imagined; however, your kids should qualify for social security survivors benefits, and you may own some other assets which can be sold to add to the kitty…so, maybe you can get closer to that yearly $50,000 income stream with less life insurance.
Assuming your spouse also brings in a portion of your family’s monthly income, that income helps to offset the amount of life insurance needed by your family. Long story short, set an appointment with a qualified life insurance agent this week to discuss your unique situation. Look for a life insurance agent with some alphabet soup behind his/her name…CLU, ChFC, LUTCF…that agent has spent many hours on formal life insurance training and education, must meet strict ethical standards and wants to be your insurance partner for the long haul. You will not find that kind of partnership on-line…only buy on-line if you want to entrust your family’s future to a computer program and an artificial voice at the end of an 800 phone number when you need help the most.