How Much Life Insurance I Should Have

How do you decide how much life insurance you should have on yourself or your spouse?  You should take several things into account when making this huge life changing decision and ask yourself these questions.

1.  Do I really need life insurance?

Yes, everyone needs life insurance.  What would happen to your family if you passed away and there was no money to cover your burial fees or to help your family through the hard time of loosing you?

2. Which company should I use?

There are lots of companies that will provide you with life insurance.  You need to check around and see how long a company has been in business.  Check with the Better Business Bureau to see what their rating is and if the insurance company has had any claims against them.  Look for stability and longevity.

3. How much will it cost to buy life insurance?

Life insurance will vary greatly from company to company.  They also take into account your age, weight, height and health.  If you are young and healthy, you will pay less than someone a little older or overweight or with such diseases as diabetes and hypertension.

4. What will be required of me?

You will have to fill out several forms and undergo a physical.  Before you fill out the form, you need to decide who your beneficiary will be.  This person will be the one you leave your life insurance to and they will be responsible for using it as you have stated in your will.  You can split the life insurance money up usually between three or four people of your choice.  So, think wisely when choosing your beneficiary, pick someone that will do as you want.

5. What is the difference between whole life and term life?

Whole life is a type of insurance, also known as permanent insurance that you will pay on for the rest of your life.  The premiums will never go up and your benefits will never decrease. Term life is only set for a certain term of payments and coverage.  You can get term life insurance for 7 and 10 years.  The rates are usually cheaper but will increase at the end of each term.  If you are younger, you might want whole life; but it you are a senior citizen, term life will be attractive to you.  A main thought here is how long do you want to pay for life insurance?

6. What if I accidentally die of get disabled?

Yes, that can be a factor in all of our lives, we never know what tomorrow will bring, so be prepared.  Look into adding an accidental death and disability coverage to your life insurance policy.

So, now you have everything except how much life insurance you really need.  Let’s figure on a 25 year old, making $40,000.00 a year.  This person would want to get 6 to 10 times their annual salary, which would be $240,000 to $400,000.00.  This will cover you funeral cost, allow your family to take care of expenses and help greatly with school cost as your children grow up.  Even if your employer offers life insurance, you would want to have your own, as you never know when a company will have layoffs or simply close their doors.