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It is important to prepare and protect your loved ones with life insurance for when they need it most. Having the right amount of life insurance can eliminate additional burdens from financial stress. What if you died tomorrow and were no longer around to provide for your family? Do you have enough life insurance?
Most people are aware of the financial protection life insurance offers, but many say they don’t have enough.1 Without your income and the other things you do for your loved ones, could they maintain their lifestyle and keep their future plans on track? Life insurance is there to help pay for things like college tuition, childcare, mortgages and other everyday living expenses. It also allows your loved ones to be better able to reach their long-term goals after you’re gone.
It’s important to understand the amount of life insurance a person should have. Life insurance helps ease the financial burden on your family should something happen to you and may provide important living benefits. No matter what stage of life you’re in, if someone depends on you financially, you should consider protecting their future with life insurance. There are several factors to consider when figuring out if you have enough life insurance. You will need to pay close attention to your current income, number of dependents, existing coverage, current savings and other debt or financial responsibilities.
Continue reading to learn more about the amount of life insurance you need and why it’s an important part of your financial strategy.
How much life insurance should a person have?
By making sure you have enough life insurance, you’re protecting your family and their future. Experts recommend 10 times your annual income as a guideline for life insurance coverage. Another way to calculate a comfortable amount of life insurance is to multiple your income by 10 and add $100,000 per child for college expenses.2
When you think about how much life insurance a person should have it may sound like a lot of money. But if you look at how the money will be used, you can see how your needs add up.
Life insurance benefits can help pay immediate expenses for:
- Uncovered medical costs.
- Funeral expenses.
- Estate settlement costs.
- Outstanding debts.
- Mortgage balances.
By calculating the right amount of life insurance, you can be protected in a life of uncertainty. Life insurance benefits can also be used to help your family cover future financial obligations like everyday living expenses, money for college, income for your spouse during retirement and much more. How much life insurance a person should have depends on the difference between your family’s immediate future needs and their available resources.
Life insurance needs charts
This life insurance needs chart can help you project the monthly income your family may generate after investing a given life insurance benefit over a certain time frame.
This chart shows how long a certain life insurance benefit may cover current monthly expenses.
Insure your love with the right amount of life insurance
Do you have enough life insurance to insure your love? You work hard to provide for your loved ones by making sacrifices each day to enhance their quality of life. There’s almost nothing you wouldn’t do for them. An act of love starts with talking about life insurance, but an even greater act of love is getting life insurance. Life insurance is there to ensure your family’s financial security. Whether you love your spouse, children, parents or grandchildren, life insurance will keep them protected if something happens to you.
Talk about it
Did you know that 59% of people would feel more secure in their relationship if they discussed getting life insurance with their partner?3 Finances play a significant role in relationships. When talking about the future with your spouse, think about discussing life insurance to protect both you and your family for years to come. Building this foundation early on is a great way to protect your finances and your relationship.
Plan and protect
Planning your future with someone can be fun and exciting. Insuring your love with life insurance is the cherry on top. People are attracted to partners who plan, and that includes financial preparedness. 42% describe financial security as one of the most attractive traits to have in a romantic partner.3 When planning out the right amount of life insurance for you and your family, the three main things you want to consider are your immediate, ongoing and future expenses. Along with letting your loved ones maintain their standard of living now, life insurance is there to help ensure their future.
Consider stay-at-home spouses
Don’t assume if you or your spouse is a stay-at-home parent that they don’t need life insurance too. Many people mistakenly think life insurance is only to replace the lost income of a deceased working loved one. However, stay-at-home parents provide many childcare and household services for free. If they passed away, you may suddenly need to pay for this work that was never included in your budget. Some examples include house cleaning, daycare, meal services, transportation, yard work, laundry and many other household duties.
All the little things a stay-at-home parent routinely does for the family adds up quickly if a working parent doesn’t have the time to pick them up. Instead of replacing an income, life insurance would help cover the cost of hiring others to do the work a stay-at-home spouse does for free to keep a family’s home and busy schedule running smoothly.
Ameritas can help
Understanding the amount of life insurance you need is a good starting point. But you’ll also need to think about what type of life insurance is best for your financial strategy. Read this article to learn more about the difference between permanent and term life insurance. You can also learn more about Ameritas offerings for life insurance.
Contact a financial professional to help you protect your loved ones.
Need help with your financial goals?
While you can learn more about our products on this website, this information is no substitute for the guidance of a qualified professional. If you’re serious about assessing your financial wellness, contact a financial professional.
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