So, how much insurance do YOU need? This is a great question. We like to use the “LIFE” acronym to help determine how much coverage you need. It doesn’t need to be complicated but it does require some thought so you end up with the coverage you need.
L – LOANS. If you add mortgages, student loans, auto loans, credit card debt, etc., what would that value be? If you passed, how much money would your spouse or significant other need to pay off outstanding loans to avoid being strapped with a huge amount of debt?
I – Income. The ideal scenario is that you include 2-3 years’ worth of your income for your spouse or significant other in case your loved one needs time to look for work or get back on his/her feet again. What would this value be?
F- Final Expenses. Have you researched the cost of the average funeral? Depending on the type of funeral, you could be looking at a likely range of $2,000 to $15,000 or higher. Have you discussed the type of funeral you’d want? What would this value be?
E – Education. This could include costs for your spouse’s future education in case they need to return to school. What about your plan for helping any kids with educational costs? A basic school could easily run $30K - $40K per year, then multiply that number times the number of years in school times the number of kids. What would this value be?
If you add together the values for each of the above, that would be the minimum amount of coverage you might want to consider for the “death benefit” value of your life insurance policy. Remember, life changes so the value you come up with now may be vastly different in 10 years. We can go through, in more depth, what this value would look like, but the LIFE acronym is a great tool to use to help determine a baseline amount of coverage you would want. Feel free to call us at 720-335-6872 to further discuss. We’re glad to help.
