Log in

Tag cloud

, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

All site tags

How much Life Insurance do I need for my family?

If you're wondering how much life

 

I'm gonna give you some specific ways

you can tell and figure out how much you

 

need I posted something to Facebook

about life insurance and I got this

 

comment from a reader that is just kind

of stuck with me

 

you know because I think the truth is

that most of us haven't experienced

 

something like this but this is real

life and unexpected stuff happens and it

 

would be wise of us to be ready for the

unexpected now I do need to add that I'm

 

not a life insurance agent I'm an

enthusiast I'm someone who's interested

 

in this stuff so definitely consult a

professional if you feel uncomfortable

 

making any decisions and just view this

content as educational and with all that

 

out of the way let's get to it

 

so the first in easiest way probably to

tell how much life insurance you need is

 

to actually use a calculator and

typically a calculator like this is

 

going to ask you a number of specific

questions about your financial situation

 

to help you determine you know how much

you actually need because this isn't a

 

one-size-fits-all answer and the

calculator that I use for this is over

 

at Policy Genius and I went ahead and

ran a sample scenario using this

 

calculator so you can kind of get a feel

for how this calculator works now we are

 

affiliate partners with policy genius so

if you do decide to use this and we'd

 

appreciate if you use our link because

it'll help support the channel support

 

our mission of what we're trying to do I

mean we'll have all those links up above

 

or down below in the description as well

and so to give it at this calculator all

 

you need to do is just click on this

page here and I will have a link up

 

above so you can get over there and then

they have a big button to calculate

 

coverage you can just click on that and

then it will get you started going

 

through this process so that is probably

the easiest and quickest way to get the

 

most accurate estimate for how much life

insurance you need now there are two

 

other fairly popular methods for kind of

determining how much life insurance you

 

need so we'll go ahead and cover those

now and one of them is called the 10x Rule

 

and basically the gist of this is

that you take your annual salary and you

 

multiply it by ten and that's the amount

of coverage that you need so if you make

 

$50,000 a year then you would want to

get $500,000 of coverage and I view this

 

more as a general rule of thumb maybe

like a more of a ballpark number to

 

consider because everybody's financial

situation is so much different if you're

 

you know in your mid-30s and you have

five kids and you have a wife who stays

 

at home and you

have much savings like that's gonna look

 

a whole lot different than if your

empty-nesters you know when you have a

 

big retirement savings and all your debt

paid off like those are two very

 

different scenarios and while rule of

thumb like this can give you a ballpark

 

to kind of consider and get started you

probably should dive a little bit deeper

 

to get something a little bit more

accurate for your specific situation and

 

that leads us to another popular method

of determining how much life insurance

 

you need and that is The Dime Formula

and in the case of this formula D.I.M.E.

 

stands for Debt Income Mortgage and

Education and these are the four factors

 

to consider when determining how much

life insurance you need and basically

 

this would work like this you would take

all the debts that you have exclude your

 

mortgage but just focus on all your

other debts and total them up and next

 

you would go look at your income and you

would figure out what your annual income

 

is and hopefully you know that and they

would multiply that by the number of

 

years that you think your family would

need support without you being there and

 

then after that you would look at the

mortgage and you would figure out how

 

much mortgage debt you have and they do

would take that number and then finally

 

for the education component you would

add up all of the estimated education

 

expenses for all of your kids and now

you would take all four of those numbers

 

and add them up for one grand total and

that is the amount of coverage that you

 

need and as you might be thinking even

with a formula like that there is

 

there's definitely some gray area and

there's some things that just aren't

 

really really clear and so that's the

thing it's like it's just an estimate

 

but the bottom line is that it's a whole

lot better to have some life insurance

 

than to have no life insurance so even

if you're underinsured a little bit it's

 

just far better than not having any

insurance at all alright so last week I

 

get a question from a reader asking this

I'd like to get your take on someone who

 

doesn't have a lot of debt in a nice sum

say for retirement in the need for life

 

insurance so question is basically this

do you need life insurance if you're

 

debt-free and if you have a big

retirement savings and I told her that

 

that's actually our situation pretty

much as well and so we have all of our

 

debts paid off and we have a decent

amount say for retirement but I have two

 

kids and a third on the way and I have

wife who stays at home with them and so

 

I think it makes a good amount of sense

for me to have insurance to kind of

 

cover my family now even if I wasn't the

breadwinner in the family there are

 

still things to consider like funeral

expenses because you would hate to have

 

to pull money out of your 401k or borrow

equity from the house to cover the

 

funeral expenses and especially with

life insurance particularly term insurance

 

being so cheap that it just it makes

sense to get it if you can and so

 

the next question you probably have is

what I had the first time I did this and

 

that is how do I get the cheapest policy

I don't want to pay too much for it I

 

won't give the cheapest policy that's

gonna get the job done and the answer is

 

that you need to shop around you need to

look at different insurance carriers

 

because they're all different in

depending on your actual situation

 

you're going to find a different rate

and this is why Policy Genius has been

 

my go-to recommendation after all these

years of looking at all these different

 

insurance sites because they do this so

well they let you compare quotes from

 

dozens of insurance companies all on one

page and then they could take care of

 

all the paperwork for you as well and

then on top of that they have

 

noncommissioned agents who will answer

your question so these guys are doing it

 

right and they really make it as simple

as it possibly can be so like I said

 

before we are affiliate partners with

them so you can support us by using the

 

links in the description up above down

below to get over their website and just

 

in case you think that I am recommending

them just because we're affiliated

 

partners the truth is is we could be

affiliate partners with any of the life

 

insurance companies out there and this

is actually the one from my years and

 

years of doing this I actually like that

I actually use and that's why we've

 

chosen to be affiliate partners with

them and as a little bit more incentive

 

for you if you decide to get life

insurance and kind of go through our

 

link to get to policy genius to do it I

would be happy to send you a copy of our

 

book completely for free so if that

interest you will have instructions down

 

in the description below so we can get

you all hooked up and if you're new to

 

our channel welcome so glad you're here

and what we do here is we talk about

 

practical ways to kind of put more money

in your pocket and to be wise with money

 

but then we also talk about some of the

timeless biblical principles and how to

 

manage our money wisely and so if that's

something that resonates with you you

 

can consider subscribing so you can hear

from us as we create more hopefully

 

awesome content that you will enjoy

alright that is all for today and I will

 

leave you with one last thought

regardless of how you do it just make

 

sure your family is insured make sure

that you have life insurance coverage

 

just in case you happen to meet Jesus a

little bit before you expect we want them taken care of.

 

 

 

Comments