Sometimes it is better to ask how much can you afford?
If you’ve been looking in to term life insurance and are trying to decide on the logistics of your policy, you’ve likely got some questions. After all, deciding to buy life insurance is the first big step, but defining your term, naming beneficiaries and figuring out which insurance provider to choose can be overwhelming.
If there’s one question we hear, time and time again, from people considering term life insurance, it’s ‘How much term life insurance do I need? ’ This is a great question that can really only be answered by you. With that being said, below are some things to think about that may make it easier to determine an adequate term.
Why are you buying?
When you’re trying to answer ‘how much term life insurance do I need? The first thing to ask yourself is why you’re buying insurance in the first place. When you define who it is that you’re looking to protect and what motivated you to choose term life over whole life insurance, chances are you will have a much clearer idea as to how long you will need coverage.
So, for instance, if you are a parent of young children and you want to ensure they’re financially covered should you die before they become adults and are able to support themselves, you may consider a 20 year term. Or, if it’s your spouse you want to protect and it’s likely they will only need support if you were to die before they can retire, then 10 years (depending on their age) may suffice.
If you’ve entered into a business partnership and are looking to protect your partner, at least in the beginning stages of the business’ development, a 5 year policy might be all that you need.
If you have just bought a new home and have a $150,000 mortgage maybe you just want to take out a 30 year term life policy for $150,000. You see, when you ask how much life insurance you need, it all comes down to why you
need the life insurance and how much you can afford. Once you figure out that then you can start to determine how much you really need.
One Quick Way to Find out How Much You Need.
We use an acronym called dime for a quick and easy way to figure out your needs if your not sure.
The " D " is for debt. Add up all debt like credit cards, loans, any other outstanding debt.
The " I ' is for income. You want to replace lost income that your family will not be able to generate with you gone. So take your annual salary and at least replace it for ten years. So if you make $50,000 a year you want $500,000 to replace ten years of income.
The " M " is for mortgage. Take out enough to make sure you pay off the home in case you are gone. To us, this is the biggest one. If you can eliminate all debt and the mortgage and your spouse still has a job then she will have a fighting chance.
The " E " is for education. You want your children to be able to have a good education so don't forget to factor that in the equation. College cost is headed in one direction and that is up. by having enough life insurance to pay off a higher education can give our kids a huge head start.
If your still not sure how much life insurance you need:
If you go through the above thought process and still aren’t 100% sure about the right policy length, contact our team, ask ‘How much term life insurance do I need?,’ and they will gladly walk you through the decision making process. Visit TermLife-Insurance.com for all your life insurance needs.
Sometimes it's as simple as how much life insurance can I afford. No matter what you want it all has to fit into your budget if not your it's simply going to lapse. Let us help you find the most coverage that fits into your budget.