How Much Life Insurance Coverage Do I Need?

If there’s anything living through 2020 has taught us, it’s that life can change in an instant! Since September is Life Insurance Awareness Month, now is a great time to evaluate your life insurance options. The important thing to remember about life insurance is that you can’t wait until you need it to get it. If it’s something you’ve been putting off, we urge you not to wait any longer. In 2019, only 57% of people had a life insurance policy. That remaining 43% is a scary number. While there are certainly single people who don’t need life insurance, there are also plenty of people with families depending on them who don’t currently have coverage. 

How much life insurance coverage do you need though? 

You want to make sure you have enough so that your family will not suffer financially, but you don’t want to be paying for coverage you don’t need. The general rule of thumb is that your life insurance policy should cover 7-15 times your annual income. But that’s really just an estimate, and a widely variable one at that. Income isn’t the only factor in determining how much coverage you need. Just as important to consider are your debts, foreseeable expenses and the specific needs of your family members.

What are your debts?

The first debt most people think about in relation to life insurance is a mortgage. You want to make sure your family has enough money to keep the roof over their heads. That isn’t the only debt you may need to consider though. Payments on vehicle loans, student loan debt and past medical expenses can also cripple a family financially if they are unable to pay them. Make sure you’re taking all of your debts into account when deciding how much coverage you need.

Are there foreseeable expenses in your family’s future?

There may be expenses you aren’t paying now that your family will need to pay eventually. College funds are a big consideration here. With tuition rising every year, a college education, for many young people, is either out of reach or will saddle them with massive debt for life. If you want your kids to have the opportunity to achieve a college education without the financial burden, having enough life insurance coverage to pay for school (or at least part of it) is something you’ll want to consider. If you’re older and are mainly worried about taking care of a spouse, you’ll want to consider retirement and long-term care costs. 

What are your family’s specific needs?

Not every family looks the same! Some people are single parents, are caring for elderly or disabled family members or have more children than the average two. Life insurance isn’t one-size-fits-all. You know your family better than anyone. When discussing your options with us, be sure to talk about how many family members depend on you and any specific needs they have. The more we know, the better we can help you find the life insurance coverage that will work best for you and your family.

You may be thinking that of course you want to protect your family as much as you can, but can you afford to do so? Life insurance may not actually be as expensive as you think. Most people overestimate the cost. 

We want all of our clients to be safe, healthy, and have the peace of mind to know their family’s financial future is secure in the worst case scenario. Give us a call at 704-821-4460 and we can go over your options. Be sure to also follow us on Twitter, Facebook, Instagram, YouTube, LinkedIn and Pinterest for more tips, fun updates and helpful information about insurance.

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