How much life insurance is enough?
One of the most common questions when purchasing life insurance is, “How much is enough?” The answer lies in what’s called a needs analysis. A needs analysis examines your specific financial and personal situation to help determine the type and amount of life insurance that will best satisfy your needs.
One of the first decisions you will have to make when purchasing life insurance is whether to choose term or permanent coverage.
Term life insurance can offer coverage from one year to 30 years or longer, and is often purchased to provide funds for financial obligations such as a mortgage or a child’s tuition in case the insured dies.
Permanent life insurance, which includes whole life and universal life policies, generally provides coverage throughout a person’s life. Unlike term insurance, a permanent life policy may gradually accumulate a cash value, which you may be able to borrow against while the policy is still active or cash in upon surrender of the policy.
Determining the right amount of coverage requires a solid understanding of all your policy options as well as your financial needs and goals.
A needs analysis will seek answers to questions like: What are my family’s immediate and future income needs? How much supplemental income will they need to meet expenses if I were to die tomorrow? And how much can I afford to pay in premium?
Your roles as a spouse, grandparent, stay-at-home parent or small business owner mean that you have specific needs. If you have not purchased life insurance yet, consider sitting down with an insurance agent to discuss your situation and options. If you already have a policy, discuss with your agent if it’s still appropriate for your present situation and any lifestyle changes that may be on the horizon.
Carrie Espinosa has been an agent for American Family Life Insurance Company since 2004. Her office is located at 5101 Washington Street, Ste 28 Gurnee, IL. Carrie can be contacted at 847-360-0863.
