Life Insurance Coverage: How Much is Enough?
A good approximation of how much life insurance you'll need is to estimate 60% of your current income times the number of years to retirement. So, if you're 55 and earn $40,000 a year, you should estimate a life insurance policy of about $240,000. Many companies overestimate the amount of life insurance you'll really need in order to get you to buy a bigger policy, but most Americans have too much life insurance.
For those who aren't sure how much life insurance coverage they need, there are a few things to keep in mind. If you have children or other people who depend on you, you should have life insurance. Life insurance protects your loved ones from financial burdens when you're gone. It will guarantee that your family can continue to live at the life style you have provided for them.
Types of Live Insurance Coverage
There are two main types of life insurance: whole and term. Whole life insurance is coverage for the rest of your life and, typically, your money is invested in hope for a better return on your policy. A term life insurance plan is effective for a set period of time, usually between 10 and 30 years, and is more straight-forward. Submit your information and find what type of coverage is best for you and your family.
Remember that some life insurance is better than none. For a small amount each month, you can guarantee that your family will be somewhat protected. If you can't afford a full policy, plan on coverage for a set period of time, somewhere between 5 to 10 years.
Life insurance coverage is less expensive for younger, healthier people so getting coverage now will cost you less than next year. We all know that with age comes risk. Applying for a policy with a pre-existing condition can be much harder than if you're healthy, so keep that in mind too.
Why You Should Consider Coverage
Life insurance coverage isn't exactly a popular topic of conversation around the dinner table or at a cocktail party, but life insurance certainly is an essential component of a financial plan, that seeks to protect your family and loved ones in the event of your untimely demise. If there are people that you truly care about, who would suffer severe financial hardship if the unthinkable should happen, life insurance is not something that you should ignore.