How much insurance is enough?

If you’re looking for an easy and quick response to this question, then you aren’t talking to someone who really knows insurance.

There are many factors to consider in evaluating your life insurance needs which may include current age, spouse’s age, children (college costs), funeral costs, taxes due on death, outstanding loans and annual income needs.  A life insurance policy will ensure your family’s needs will continue to be met, even if your untimely death cuts your earnings potential short.

There are many insurance calculators available on the internet which can assist in estimating the amount needed.  A few questions regarding Age, Income, Immediate Cash Needs, Long-Term Income Needs and Available Resources are asked and you’re one step closer to meeting your goal.

A better option is meeting with your financial advisor who can help you through the process.  They will also be helpful in suggesting what type of insurance will better meet your needs as there is a wide range to choose from.  Some examples are term insurance which has a maturity date usually ranging from 5 to 20 years or permanent (whole) insurance which stays in effect until your passing and may include a savings component.  You may even require a mix of different products depending on your needs.

Term Life
Pro for term life – lower premiums, covers immediate need (mortgage balance, insurance until kids leave home).
Con for term life - renewal costs at end of term are higher, may not qualify for renewal, can only have until a certain age (ie. 75).

Whole Life
Pro for whole life - permanent insurance so stays on for whole life, premiums never change
Con for whole life - initial premiums are higher than term insurance.

Insurance can be complicated stuff, with too many “experts” just boiling it down to asking only one or two questions and then offering a solution.  Your life is more complex than that.  Make sure you talk to someone you trust to get the best help possible.  This may mean having to try out a few insurance agencies just to make sure you get the relationship and service that you want.  Your relationship with them will last as long as your insurance policy, and even longer for your family.
Elaine