“I’m worth more dead than I am alive.” Most of us who own term Life Insurance have probably said this a number of times. It’s enough to make the average life insurance agent wince. The fact is that the average life insurance agent knows that it simply isn’t t true. You’re likely worth a lot more alive than you are dead.
And we’re not just talking about your sentimental and emotional value to your family. Don’t get us wrong; we know they’ll miss you, and you probably have a lot of intangible value to your family. If you don’t, we recommend family counseling, fast!
Believe it or not, though, you have a great deal of financial value to your family. Even if you work in a mediocre job with relatively low pay and little future, the loss of your income would likely hit your family fairly hard.
When you consider purchasing term life insurance, loss of income should be the main factor. Determine how many years of income you would need to replace, and multiply that by your current income. In most cases, you should take that number and add at least 25% to it, to account for the fact that your wages will probably (hopefully) go up at least that much over the course of the term policy.
There are other things to conisder when deciding how much term life insurance you need, of course. Here are the main factors, other than your income, which you will want to consider when deciding how much term life insurance to buy:
And we’re not just talking about your sentimental and emotional value to your family. Don’t get us wrong; we know they’ll miss you, and you probably have a lot of intangible value to your family. If you don’t, we recommend family counseling, fast!
Believe it or not, though, you have a great deal of financial value to your family. Even if you work in a mediocre job with relatively low pay and little future, the loss of your income would likely hit your family fairly hard.
When you consider purchasing term life insurance, loss of income should be the main factor. Determine how many years of income you would need to replace, and multiply that by your current income. In most cases, you should take that number and add at least 25% to it, to account for the fact that your wages will probably (hopefully) go up at least that much over the course of the term policy.
There are other things to conisder when deciding how much term life insurance you need, of course. Here are the main factors, other than your income, which you will want to consider when deciding how much term life insurance to buy:
- Debt Repayment. You will want to make sure your life insurance is sufficient to leave your family without burdensome debts after your income is lost. This includes car loans, personal loans, credit cards, and all other forms of credit.
- Mortgage. This is figured separately from debt repayment because many mortgages have life insurance clauses built in. Additionally, many insurance companies will sell a special kind of term insurance that is designed specifically to pay off your house if you die during the term, and this kind of insurance is much cheaper even than regular term life insurance.
- Kids’ College Expenses. If you want your kids to be able to attend Big Outofstate U, like their dad did, you might want to put something extra in the life insurance policy to make sure they’ll be able to do that if you die. Even community college is expensive enough to warrant making sure you cover the costs in your policy.
- Burial Expenses. Even if you want them to cremate you and scatter the ashes in grandma’s meatloaf, it’s going to cost your family several thousand dollars. The average funeral expense is over $7,000 these days, and even if your family goes cheap, they’re going to spend at least $3,000.
