Life Insurance Coverage–what is enough?

I get this question often and everyone hates the answer I give them because it is that dreaded phrase, “it depends”. But the long and short of it is pretty clear cut so I will try to break it down for you so you can determine how much is “enough”. First you must go to your liabilities on the Financial Statement. A liability is what you owe. Cars, house, debt, etc. You should at least have as much coverage to wipe out all the debt upon death. Then you must look at those yearly social security statements that you get. If you have a family, it should say if you die tomorrow your spouse caring for your dependents would get this much….. Look at that amount, can the surviving family live on this? This would be your Expenses on your financial statement. Remember all the debt is wiped out, no mortgage but you will have to cover taxes and insurance for the house. If not, how much do you need per month and times it by 12 to get a yearly amount. Then how many years will you need that, times it by that many years. Now if there are no kids and it is a dual income household, what is the likelihood of the spouse leaving their job after their loved one has died, not likely. So you don’t have to have crazy expensive coverage, no one needs to become a millionaire if their spouse dies.

So the next question is what is the best life insurance coverage? I have found through my experience the first place to look is through your place of employment, this is usually more coverage for less money and it is directly taken out of your paycheck. Outside of that there are life insurance salesmen anywhere you look.

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~ by debt2dreams on March 22, 2009.

One Response to “Life Insurance Coverage–what is enough?”

  1. *There are some interesting points in time in this article but I don�t know if I see all of them center to heart. There is some validity but I will take hold opinion until I look into it further. Good article , thanks and we want more! Added to FeedBurner as well

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