Life Insurance: What families need to know
Whether you are single, newly married and expecting baby number one, or you already have an established family, life insurance should be an essential part of your financial planning. Here are some common questions that we get asked regarding Life Insurance:
Is you employer offered life insurance enough?
This is one of the biggest mistakes people make. Thinking that their employer coverage is sufficient. Most employer offered plans are 1-2 times annual income. However experts tend to agree that for sufficient coverage, that number should be at least 10 times annual income.
What if you lose your job or want to pursue another career path? Your life insurance may not follow you. At times you may have an option to keep the plan active, but often that can be very expensive. Much more than getting your own plan. An affordable solution to bridge that gap could be a well selected term life policy.
Selecting A Term Length
How long will you need term life insurance coverage? There’s no 'one size fits all' for the number of years you will want coverage. So choose a length of time that will cover your children for the number of years you expect them to rely on you financially. Other factors to consider are when you expect to pay off your mortgage, when you plan to retire, etc.
It may be wise to include a buffer as well. For example, rather than choosing a 20-year term length to cover your child until they are 18, you may choose a 30-year term to buffer against any unpredictable life events. Lets face it, these days we see more and more children living with their parents well into their mid to late 20's.
Selecting An Ideal Coverage Amount
Calculating how much life insurance you should buy is normally agreed upon by financial experts. Most agree that a good starting point is to multiply your current salary by ten. For example, if you make $65K/year, experts recommend that the amount of coverage you should apply for would be around $650,000. However, you can still choose more or less depending on your situation. Talk to Matt Carlson, our licensed Life Insurance agent and we can provide you with a fun way to calculate the needs for your family!
Regardless of any coverage you may have through work, you can easily protect your growing family with term life insurance. Don't wait, put together a strong financial plan today!