How much life and/or protection insurance do you need?
Think about Your Goals
The first step to finding out how much insurance you need is to think about your goals for life/protection insurance. Think about what would happen if you were to die or become ill unexpectedly.
- Do you have a mortgage or other debts that you would like paid off?
- Would you like to make sure that someone who is financially dependent on you (i.e., a spouse or child) has enough income if you die or fall permanently ill?
- Would you like to make sure that a child has enough money to go to college?
- Do you have enough in assets set aside to cover your final expenses, such as funeral and final medical expenses? If not, would you like to provide some money to cover these expenses for your family?
- Do you have any other goals for friends or family or charitable organizations for which you would like life insurance to provide a benefit?
- Is your net worth large enough that there may be substantial estate taxes when you die? Do you have cash to cover these taxes or are your assets mostly in property such as a farm or small business that you would prefer that your heirs not have to sell?
If you find that you answer “yes” to any or all of these questions, then you may want to think about buying an insurance policy. The next step is to apply a dollar amount to each of these goals.