The emotional stress that comes with dealing with the loss of a loved one can be compounded if you have to deal with an associated financial loss as well. This can happen if you are a child who has lost a parent who provided for you or a homemaker who has lost their bread-winning spouse. For these reasons and others, life insurance can be very instrumental in providing financial security to your family at the time of transition.
It's just as important to have the right amount of life insurance, as it is to have life insurance....
Obtaining life insurance is important, but having an adequate amount of life insurance is just as important. A thorough needs analysis should be done in order to determine the amount of coverage necessary for YOUR family. Some things to consider in determining how much you need are:
- Cash needs to cover funeral costs
- Cash needs to cover outstanding debt that can eat into your proceeds (i.e. credit cards, bank loans, etc.)
- Mortgage payment needs
- Family income needs during dependency period and in later years
- College funding for children and/or spouse
- Retirement income needs
- Health insurance needs
Taking these needs into consideration may require you to increase the amount of coverage you may have to a pre-existing life insurance policy and/or replace a current policy. If you are not insured, this calculation will help you to be more prepared for your selection of a policy that will best meet the needs of your family.
Questions to ask when choosing the right type of life insurance policy for your family....
Now that you understand why you need life insurance and how to determine the amount of necessary coverage, you should have a general understanding of the types of insurance options available for your family . Some questions to consider when making a decision upon a life insurance policy are:
- Should the coverage be permanent insurance, term insurance or a combination of the two?
- How much premium can you afford to pay?
- How will any pre-diagnosed medical issues affect my ability to obtain life insurance?
- Should my spouse and I obtain two separate policies or one that will protect us both?
In summary, the best way to protect your family with life insurance is to calculate the right amount of coverage you need versus selecting a random amount that may not be sufficient for your family, and asking the right questions to ensure that your financial advisor understands your concerns and priorities. To read more blogs, click here.
To learn more specifics on life insurance options available for your family click the button below:
