TUESDAY, AUGUST 9, 2011
For many, life insurance is a love-hate relationship. Some individuals love the peace of mind they have knowing their family is taken care of if anything should happen to them. Others hate even thinking about the inevitability of death and turn their cheek to the issue entirely.
 Regardless of emotions, if you come home from work to loved ones who are depending on you, you should have a life insurance policy. But determining how much life insurance to carry can be a daunting task. A few basic principles will help you make the right decision for your family and give you the peace of mind of a smart decision.
It is important to keep in mind the purpose of life insurance. If you die, the death benefit to your survivors should be enough so they can maintain the same living standard you currently enjoy. Life insurance is a unique product because there is no cookie cutter policy that works for everyone. This is the only type of insurance that you can use for others after you pass on, so it is crucial to look at the following individual family needs:
a. How much debt you have: Even though you will, debtors never die. Upon your passing, all of your debts must be paid off in full. This includes your mortgage, car loans, and any outstanding credit cards that are in your name.
b. Income Replacement: If you are the only provider for your dependents, you will need a policy payout that is large enough to replace your income for at least one year, plus a little extra to guard against inflation.
c. Future Obligations: In addition to funeral expenses, consider your spousal needs, child’s college tuition, future weddings, etc.
d. Your Age: Contrary to popular belief, you actually need more insurance when you have a young family than as you grow older. When you have young children, the insurance policy has more responsibility to cover decades of future earnings that will be lost if you die. As you get older, you can gradually decrease coverage because you have fewer years of earnings to make up for, your spouse has more assets to live off of and fewer years of life remaining, and your children are closer to being on their own.
The answer to the question, “How much life insurance should I take out?” is often met with another question, “How much life insurance do you need?” This is because the magic answer is one that only you can determine for yourself.
To learn more about how to determine the right amount of Louisville life insurance for your situation contact us at Claude Reynolds Insurance.
By Matt Reynolds - Google+
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