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Topics: Life Insurance |
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| How Much Life Insurance Do I need? |
Submitted by:
Ray @ Tip Hero 10/14/2009 5:35 PM
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One of my favorite blogs built a free online tool to help you calculate how much life insurance you need (link). I have a suspicion that many people end up buying more life insurance than they really need. Life Insurance companies often employ a very emotional message to sell policies with most ads featuring young children to drive home their message.
The three main types of life insurance are term, universal, and whole life. The latter two are basically term life insurance with some type of investment option attached. I always prefer to go the uncomplicated route, as I've often found that when things get complicated, they also get more expensive. There are some reasons, like estate planning, where you might want to go with a policy other than term. It's a wise idea to discuss options with a professional personal financial adviser, but make sure you're aware of how they are compensated, as they are often paid more for pushing whole and universal policies (which should also give you some idea of which policy is most cost effective).
When considering how much life insurance you need, a few things to consider include: your spouse's salary, monthly expenses, remaining mortgage debt and other liabilities, upcoming college expenses, funeral expenses, and inflation. You'll also want to check with your employer to see if you have a life insurance policy as part of your benefits package.
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