life-insurance

Experts tell us that life insurance should be designed to fill a specific need. The need will usually vary from person to person and family to family. It may also change over time. Figuring out how what types of life insurance you need, and how much life insurance you need is critical if your family is to be able to live a good life if something happens to you or your spouse or partner.

If you have a young family, for example, some suggest that you need enough life insurance to cover as much as 10 times your annual income.  However, you and your family may need more or less, depending on your standard of living, your age, the age of your dependents and other factors.

Generally, there are four important reasons that people buy life insurance. Thinking about your needs in each of these areas could help you determine whether you need life insurance and, if so, how much you might need.

  1. Income Replacement – Could you continue to live at your current standard of living if your spouse or partner died? Could your spouse carry on if you were no longer around? If not, how much money would it take? Perhaps you need to replace the amount your spouse earns. If you will have to stop working to stay home with children, you’ll need to replace both salaries, at least until your children are older. Understanding your family’s needs will enable a life insurance broker to determine how much insurance you should have.
  1. Debt Repayment – Could you pay your mortgage and other debts if you lost your spouse?  Sometimes it’s not enough to have insurance that replaces your partner’s salary. If you have a large mortgage or significant school loans or other debts to pay off, you may want a policy that would completely pay off all your debts.
  1. Children – Could you pay for the care and education of your children without a second income? Replacing your partner’s salary may provide enough money to pay for childcare and eventually for your children’s college education. However, as with debt repayment, some people prefer to add to their insurance so it would completely cover the children’s education costs if you or your spouse were not there.
  1. Other dependents – If it became necessary, could you support your parents, your spouse’s parents or others who might depend on you? Perhaps you have a sibling with special needs. After your parents are gone, you may find yourself responsible for her care. If this is the case, insurance can help you to provide for other people you care about.

There are a number of websites that can help you calculate how much life insurance your family might need. You might try this calculator, offered by the nonprofit Life Happens organization.

However, there’s no substitute for sitting down with a person who understands life insurance and has advised many others in your situation. Ask your friends or colleagues to help you find a life insurance agent who will help you determine what you need to protect your family, or consider Serra Benefits. We’ve helped lots of people ensure that their loved ones will be okay financially if something happens to them or their spouse.

We can help you figure out what types of life insurance are right for you and provide affordable life insurance quotes. Give us a call today at 760-439-9700 or email John Young at Serra Benefits.