When signing up for a life insurance plan, balance is important. You want to get the right amount of coverage for your needs and goals, without overpaying for coverage you don’t need. Unfortunately, there’s no way of knowing with complete certainty how much life insurance you should take out. But by considering these standard costs, you can come up with a reasonable number.
Determining How Much Life Insurance You Need
When calculating a life insurance benefit amount, you should factor in the following:
- Outstanding debt amounts
- End of life costs and funeral expenses
- Day-to-day expenses of beneficiaries
In addition, establish a term length equal to or greater than your longest financial obligation, so your beneficiaries are secure for the entirety of that term.
In general, most life insurance policyholders take out coverage equal to 10-15 times their annual income. But with life insurance, it may make sense to be a little less modest. If your loved ones receive more money than they need, that’s not a terrible situation. If they don’t have enough money to pay debts and bills, they could struggle financially.
The best strategy to determine how much life insurance you need is to have honest conversations with your loved ones, to fully understand your debts and obligations, and to act in a way that protects your loved ones’ best interests.
Choosing a life insurance plan can be difficult. Working with an insurance broker can help you find a plan that fits your needs. Schedule a one-on-one meeting with one of our Minneapolis insurance brokers to get your insurance questions answered!
Twin City Underwriters offers a variety of life insurance and Medicare information meetings as webinars each month. To join a meeting check out our event calendar and take charge of your insurance decision process. If you have any questions about signing into a Zoom webinar, please contact us for support.