Don’t have life insurance? Or worried that you don’t have enough? You’re not the only one. According to a recent study from InsuranceQuotes, 40 percent of Americans don’t have life insurance coverage.1 Even among those who have insurance, many don’t know if they have the correct amount.
Risk management is a core component in any financial strategy. It’s hard to save for long-term goals if you haven’t protected yourself against catastrophic risk. There may be no greater financial risk than the death of a parent, spouse or financial provider. While you may not feel like you will pass away soon, unexpected death does happen. And it often creates sizable financial challenges for the deceased’s spouse, children and other loved ones. Life insurance helps you minimize that risk.
If you’re unsure about your coverage, now may be the right time to reassess your protection. Below are a few tips to help you estimate your life insurance need. You also may want to meet with a financial professional to help you develop a life insurance protection strategy specifically for your needs and goals.
What is your need?
Life insurance is designed to provide financial benefit upon your passing to your children, spouse, loved ones, business partners or whomever else you may name as your beneficiary. The policy pays out a tax-free lump-sum settlement to your beneficiaries. They can then use those funds to cover costs related to your passing.
Thinking about your own death may not be a pleasant experience. However, try to imagine what the days, months and years after your unexpected death would be like. Would your family face costs that they can’t afford? How would they replace your income? Who else would be adversely affected by your death?
Make a list of potential expenses that your spouse, children or other loved ones may face, and estimate their amounts. Then add up the costs. The sum should give you a total need that you can use as a base for calculating your coverage amount.
What legacy do you want to leave?
Life insurance can be used to cover expenses, but you can also use it to leave a legacy or gift for your loved ones. For instance, you could leave money to pay for your child’s education or to help your spouse retire early. Perhaps you want to help other loved ones, like your siblings or parents.
Life insurance can be a great tool to help you leave a lasting and impactful legacy. As you determine your death benefit, be sure to consider ways in which you can help your loved ones improve their financial future.
What other costs will your loved ones face?
Life insurance is important for the family breadwinner, but you may need coverage even if you don’t have significant income. You likely make nonfinancial contributions to the home. Perhaps you care for the children, take care of home maintenance or even prepare meals. If you pass away, your spouse may need to hire help to replace those contributions. Life insurance could help him or her manage that financial burden.
Child care can be costly, as can home maintenance and other similar services. Estimate the replacement cost of your contributions and use that as a basis for determining your life insurance amount.
Ready to implement your life insurance protection strategy? Let’s talk about it. Contact us today at Financial Solutions Group. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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