We believe that everybody needs at least basic coverage, as everyone will need to cover the expenses of a funeral, cremation, or memorial service. Some individuals are looking for minimal coverage at a minimal cost, as they don’t have any dependents, so their rates can be lower. Married couples and parents generally want a policy that will help pay for the mortgage and college tuition. Yet others want to leave a legacy and want the best coverage that money can buy. It all depends on your goals, situation, flexibility, and budget.
Protecting the main income source of the household
If you are the sole provider for your family, it is important that you have a means to replace your income so that basic household expenses and daily living activities can still be possible. It is also important to consider child care costs, and any other expenses that would come up if the second parent needs to start working to replace the lost income.
The homemaker also plays a big role and needs protection
If you are a homemaker, the job you play running the household and taking care of the kids would need to be taken over. It is necessary to have someone to cook, clean, do laundry, and your kids will need a babysitter and someone who can take up at least of a portion of those errands. Although most people see the importance of protecting the spouse with the highest income source, both people need coverage to be able to lead normal lives, no matter which one passes away first.
Each family situation and financial situation is different
Some families today are living paycheck to paycheck, even with both spouses working, so their situation will be different from a family who has a strong savings account, emergency fund, as well as 401K’s, IRA’s, or other available funds in case something happens. Because each situation is different, we recommend speaking to a licensed agent who can listen to your needs and make the best recommendation for you.
Here are common ways on how people decide on how much insurance to buy:
Another idea that financial planners suggest is to include $100,000 for every kid who has to pay for college, the amount could be higher, depending on how quickly the cost of education rises.
Some financial experts recommend to begin by taking your annual income and multiplying it by 10. For example if you make $75,00 per year, you would purchase $750,000 worth of coverage.
Yet another great idea is to calculate how much money it would take to pay off your mortgage, therefore eliminating what is usually the highest expense for most families, and then multiply your income by 5 instead.