Some experts say 4 to 5 times your yearly income and others base it on a several factors. Income, juvenile children in home, total bills and education for children. I say as much as you can afford. I always help people to meet their needs usin Term or permanent combos based on ability to pay. Remember, the best insurance, regardless of amount, is what's is there when you need it. Meaning, always get what is in your budget.
Business from Burlington, NJ
Answered on Apr 21st, 2018
The best way to determine how much life insurance a person needs is to conduct a financial analysis. Everyone needs are different. I would suggest that you meet with an insurance professional to determine what would be the appropriate amount of coverage.
Calculate your financial obligations, rule of thumb is that the death benefit in your policy should equal seven to 10 times the amount of your annual salary. Email me or call me I help you to protect you and your family.
I am a firm believer in Term insurance. More when you are younger and in debt. Less as you age and become debt free. Whole life is actually an asset that the old folks home can attach when your $$ runs out. Perhaps a pre funeral purchase is in order if you do not wish to saddle your relatives with that debt when you pass. No one can touch those. It may also put a few $$ more in your pocket for your later years. Think of being kind of like self insured later in life. Hope this helps.
I like the Whole Life over the term as well. Less than 2% of the term policy holders end up in a claim. Also for young kids whole life its more valuable because in between the cash accumulation and the time that a child have ahead in his life you make time working in his favor. I know parents like to secure a larger Term policy but you can solve that by adding an accidental death benefit. More cost effective and if you think about what is the probability a child to die from natural causes? Almost 0. And the cash value build over the year could help later in life.
Great question. As most have said it varies on age, occupation, income, debt, health, assets, children, personal needs and goals. One trend I notice in the answers is a lower ratio of income to coverage. I don’t agree. Though everyone’s situation is different I don’t like using the cookie cutter, one size fits all approach.
For example if you have 4 younger children it wouldn’t be unreasonable to expect 4 years of college easily eclipsing $200,000 in 10 or 15 years. It costs that much now at many universities. That’s nearly $1 million. If your earning 50k a year that 20x income. So using a ratio to income is to simplistic. You need to sit with your advisor and analyze what would your family’s needs will be if you died tomorrow.
I also think it’s important to mention living benefits. This is one of the biggest changes I’ve seen in my 27 years in the industry. Simply said living benefits which are available in term and whole life policies pays out if you live or die.
That means if you become chronically or critically ill such as cancer, stroke, heart attack or simply a chronic disease like diabetes you can access funds in your life insurance policy to use as needed. To supplement lost income, pay a mortgage or pay for expensive treatment or drugs.
Nearly 50% of bankruptcies are due to medical costs and a majority of those people had health insurance. It’s the huge uncovered costs such as today’s anti cancer drugs of $100,000 to 200,00 and more per year that sink you financially. Let’s face it we all know people or family members touched by the scourge of cancer. Imagine the relief having access to your life insurance funds during that most difficult time would do for you.
So make it a point to ask your advisor about living benefits. They provide so much more than a death benefit. Peace of mind and we can’t place a value on that.
As for structuring the correct insurance for the right length of time that comes with the discussion you have with your advisor. I personally use a layered approach using inexpensive term coverage during your most vulnerable financial years and if necessary reduce it as your needs change that can be done day 1 with no need to prove insurability in future years. Please don’t go for the insurance company ‘lingo’ of term policies guaranteed renewable. Yes but at prices 10x or more of what you were paying during the level term. That’s where having a smaller whole life or universal life policy would benefit you with the ability of increasing the benefit as your financial situation changes.
One last thing I recommend use a licensed agent whose specialty is life insurance. You can ask any financial or wealth advisor and the vast majority of the business they do is investments not life insurance. As you can see there are many nuances to life insurance a wealth advisor simply won’t be aware of. Leave insurance to the insurance expert and investments to the investment expert.
depends on many factors... Now this is my own personal view on this matter. In most cases insurance is like playing at the casino. where making bets with the insurance company that essentially were gonna die. The house is always favored in the odds. Factors to think about is age, health, your job, lifestyle and family size. when your young id rather put my money where I can get back some on interest rather then spend it on the likelyhood of dying.
When I sit down with a client and ask questions, I always find out when they want to retire, and with how much money. Once we find out their FIN (Financial Independence Number), we help them to invest (separately) in a retirement product, outside of term insurance. If a person or couple can build a retirement that is significant, then they don't need life insurance in the later years. Typically, 20 year term insurance for a young couple works, because by the time the kids are grown, the house is paid for and the investment is increasing, the life insurance can be stopped, or lowered.
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Answers (21-30)
All great answers, but the most important one is to find an agent you trust who can offer you options and explain those options to you.
Some experts say 4 to 5 times your yearly income and others base it on a several factors. Income, juvenile children in home, total bills and education for children. I say as much as you can afford. I always help people to meet their needs usin Term or permanent combos based on ability to pay. Remember, the best insurance, regardless of amount, is what's is there when you need it. Meaning, always get what is in your budget.
The best way to determine how much life insurance a person needs is to conduct a financial analysis. Everyone needs are different. I would suggest that you meet with an insurance professional to determine what would be the appropriate amount of coverage.
Calculate your financial obligations, rule of thumb is that the death benefit in your policy should equal seven to 10 times the amount of your annual salary. Email me or call me I help you to protect you and your family.
Patricia Yakou
State Farm
It depends upon their "walk" on this planet. A More important Question should be: How Many Motorcycles should a person own? I own 23
I am a firm believer in Term insurance. More when you are younger and in debt. Less as you age and become debt free. Whole life is actually an asset that the old folks home can attach when your $$ runs out. Perhaps a pre funeral purchase is in order if you do not wish to saddle your relatives with that debt when you pass. No one can touch those. It may also put a few $$ more in your pocket for your later years. Think of being kind of like self insured later in life. Hope this helps.
I like the Whole Life over the term as well. Less than 2% of the term policy holders end up in a claim. Also for young kids whole life its more valuable because in between the cash accumulation and the time that a child have ahead in his life you make time working in his favor. I know parents like to secure a larger Term policy but you can solve that by adding an accidental death benefit. More cost effective and if you think about what is the probability a child to die from natural causes? Almost 0. And the cash value build over the year could help later in life.
Great question. As most have said it varies on age, occupation, income, debt, health, assets, children, personal needs and goals. One trend I notice in the answers is a lower ratio of income to coverage. I don’t agree. Though everyone’s situation is different I don’t like using the cookie cutter, one size fits all approach.
For example if you have 4 younger children it wouldn’t be unreasonable to expect 4 years of college easily eclipsing $200,000 in 10 or 15 years. It costs that much now at many universities. That’s nearly $1 million. If your earning 50k a year that 20x income. So using a ratio to income is to simplistic. You need to sit with your advisor and analyze what would your family’s needs will be if you died tomorrow.
I also think it’s important to mention living benefits. This is one of the biggest changes I’ve seen in my 27 years in the industry. Simply said living benefits which are available in term and whole life policies pays out if you live or die.
That means if you become chronically or critically ill such as cancer, stroke, heart attack or simply a chronic disease like diabetes you can access funds in your life insurance policy to use as needed. To supplement lost income, pay a mortgage or pay for expensive treatment or drugs.
Nearly 50% of bankruptcies are due to medical costs and a majority of those people had health insurance. It’s the huge uncovered costs such as today’s anti cancer drugs of $100,000 to 200,00 and more per year that sink you financially. Let’s face it we all know people or family members touched by the scourge of cancer. Imagine the relief having access to your life insurance funds during that most difficult time would do for you.
So make it a point to ask your advisor about living benefits. They provide so much more than a death benefit. Peace of mind and we can’t place a value on that.
As for structuring the correct insurance for the right length of time that comes with the discussion you have with your advisor. I personally use a layered approach using inexpensive term coverage during your most vulnerable financial years and if necessary reduce it as your needs change that can be done day 1 with no need to prove insurability in future years. Please don’t go for the insurance company ‘lingo’ of term policies guaranteed renewable. Yes but at prices 10x or more of what you were paying during the level term. That’s where having a smaller whole life or universal life policy would benefit you with the ability of increasing the benefit as your financial situation changes.
One last thing I recommend use a licensed agent whose specialty is life insurance. You can ask any financial or wealth advisor and the vast majority of the business they do is investments not life insurance. As you can see there are many nuances to life insurance a wealth advisor simply won’t be aware of. Leave insurance to the insurance expert and investments to the investment expert.
Good luck!
depends on many factors... Now this is my own personal view on this matter. In most cases insurance is like playing at the casino. where making bets with the insurance company that essentially were gonna die. The house is always favored in the odds. Factors to think about is age, health, your job, lifestyle and family size. when your young id rather put my money where I can get back some on interest rather then spend it on the likelyhood of dying.
When I sit down with a client and ask questions, I always find out when they want to retire, and with how much money. Once we find out their FIN (Financial Independence Number), we help them to invest (separately) in a retirement product, outside of term insurance. If a person or couple can build a retirement that is significant, then they don't need life insurance in the later years. Typically, 20 year term insurance for a young couple works, because by the time the kids are grown, the house is paid for and the investment is increasing, the life insurance can be stopped, or lowered.