The "average household" should have 6 times your annual income as the death benefit. Both spouses should be covered. Actual needs vary depending on outstanding mortgage and personal debts the insurance is intended to pay for ie; College educations for the kids etc.. Of course as couples age, the need for life insurance decreases in theory because your debts also amortize and eventually are paid. I like the concept of term insurance for the large debt loads of mortgage pay offs and I like whole life and universal life for more permanent coverage for funeral costs. I personally have a combination of term policies and universal life for this reason.
In my view, the death benefit of a life insurance policy is wholly dependent on the purpose of the coverage and the goals of the owner. What's not subjective is the fact that the costs of life insurance has decreased over the past 20 years, What's also true is that too many of our friends and neighbors don't have any life insurance!
Business from Duluth, GA
Answered on Apr 19th, 2018
It is always best to have a financial strategy based on your needs. Every component should work together to compliment the other. There are positives and negatives to all financial products. For instance, whenever you have a cash value inside of your life insurance you are earning a very low rate of return but paying a high interest rate to pay back what you borrow. It's like taking a loan out on your own money. That's where getting proper education on different financial instruments comes in to play. Every one is different, but paying money to borrow your own money just doesn't make sense to me. I hope this information is helpful.
This is a broad question. Life Insurance is not a one size fit all. The amount of Life Insurance that someone should own is based upon the need, for example Mortgage protection, Final expense, income maximization, buy sell agreement, key man insurance,college planning and the list goes on. The first thing someone should do is to find a competent agent that is versed in many areas of insurance, a agent that starts your meeting with questions to indentify what the purpose of the insurance is and once that need is established the product and the amount is the last step.
A "one size fits all" approach is NOT appropriate for life insurance. The amount needed isdifferent for each individual and family. It is critical that you meet with the client to determine their need by asking multiple questions and completing a needs analysis. From there you can discuss term vs whole life products and then cost. Always do right by your client.
Business from North Olmsted, OH
Answered on Apr 17th, 2018
Thaddeus, there are many good answers in here to your question. I agree that each person and family will have their own special needs and unique circumstances.
We also need to be aware that the current circumstances will change, and 5 or 10 years down the road their needs may be totally different. A good advisor will try to prepare you for these changes. That can only be done by spending time with them and answering questions. I'd seek a local, licensed insurance agent to help you out.
My American Family agency asks questions about the needs or the family current and the future with the absence of the loved one
Then it’s so very important via that needs analysis to also discuss Family budget and build a plan for protection from there. Making the plan affordable and convertible to a long term policy makes it the best and most important insurance for the family. Come sit with me soon and you will see for yourself how simple and assuring our agency can be for family protection
The amount depends on many factors. 1.) Income that may need to be replace. 2.) Number of dependents and whether married and whether both work. 3.) The Insureds goals. 4.) a General rule is 8 times each worker earns per year. 5.) Present Debt. 6.) I recommend buying Term when you young with a 30 year guarantee to convert.
Thaddeus, Life insurance is a back up strategy for your family's survival incase you are not here
to provide for them. The amount of coverage chosen should be a blend of affordability and need.
The best approach to determining the amount should be based upon a needs analysis of your family circumstances. Number of children and their ages, mortgage amount, family expenses, Children's education needs, age of spouse. There are many factors that should be considered. Normally I see $250,000 to $500,000 chosen for a family of 4 with the parents in their 30's or 40's.
Hope this helps.
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The "average household" should have 6 times your annual income as the death benefit. Both spouses should be covered. Actual needs vary depending on outstanding mortgage and personal debts the insurance is intended to pay for ie; College educations for the kids etc.. Of course as couples age, the need for life insurance decreases in theory because your debts also amortize and eventually are paid. I like the concept of term insurance for the large debt loads of mortgage pay offs and I like whole life and universal life for more permanent coverage for funeral costs. I personally have a combination of term policies and universal life for this reason.
In my view, the death benefit of a life insurance policy is wholly dependent on the purpose of the coverage and the goals of the owner. What's not subjective is the fact that the costs of life insurance has decreased over the past 20 years, What's also true is that too many of our friends and neighbors don't have any life insurance!
It is always best to have a financial strategy based on your needs. Every component should work together to compliment the other. There are positives and negatives to all financial products. For instance, whenever you have a cash value inside of your life insurance you are earning a very low rate of return but paying a high interest rate to pay back what you borrow. It's like taking a loan out on your own money. That's where getting proper education on different financial instruments comes in to play. Every one is different, but paying money to borrow your own money just doesn't make sense to me. I hope this information is helpful.
This is a broad question. Life Insurance is not a one size fit all. The amount of Life Insurance that someone should own is based upon the need, for example Mortgage protection, Final expense, income maximization, buy sell agreement, key man insurance,college planning and the list goes on. The first thing someone should do is to find a competent agent that is versed in many areas of insurance, a agent that starts your meeting with questions to indentify what the purpose of the insurance is and once that need is established the product and the amount is the last step.
A "one size fits all" approach is NOT appropriate for life insurance. The amount needed isdifferent for each individual and family. It is critical that you meet with the client to determine their need by asking multiple questions and completing a needs analysis. From there you can discuss term vs whole life products and then cost. Always do right by your client.
Thaddeus, there are many good answers in here to your question. I agree that each person and family will have their own special needs and unique circumstances.
We also need to be aware that the current circumstances will change, and 5 or 10 years down the road their needs may be totally different. A good advisor will try to prepare you for these changes. That can only be done by spending time with them and answering questions. I'd seek a local, licensed insurance agent to help you out.
My American Family agency asks questions about the needs or the family current and the future with the absence of the loved one
Then it’s so very important via that needs analysis to also discuss Family budget and build a plan for protection from there. Making the plan affordable and convertible to a long term policy makes it the best and most important insurance for the family. Come sit with me soon and you will see for yourself how simple and assuring our agency can be for family protection
Why is an agent asking this question?
The amount depends on many factors. 1.) Income that may need to be replace. 2.) Number of dependents and whether married and whether both work. 3.) The Insureds goals. 4.) a General rule is 8 times each worker earns per year. 5.) Present Debt. 6.) I recommend buying Term when you young with a 30 year guarantee to convert.
Thaddeus, Life insurance is a back up strategy for your family's survival incase you are not here
to provide for them. The amount of coverage chosen should be a blend of affordability and need.
The best approach to determining the amount should be based upon a needs analysis of your family circumstances. Number of children and their ages, mortgage amount, family expenses, Children's education needs, age of spouse. There are many factors that should be considered. Normally I see $250,000 to $500,000 chosen for a family of 4 with the parents in their 30's or 40's.
Hope this helps.