In this time of economic uncertainty, many of you have been expressing interest in life insurance to protect your family from unanticipated hardship. You may have seen what devastation the loss of income has had on families. The same harship that comes from a loss of a job is two-fold from the death of a family member. There is no chance of recouping the lost income, plus you now have the final expense to pay for. The steps below will help you calculate how much life insurance you need to protect you and your family.
Step 1: Immediate Expenses (funeral expenses & final expenses). A typical funeral costs about $6,000 but can easily run twice that amount. Final expenses may include: airfare, meals and lodging for family members to attend the funeral; unpaid medical bills; final tax bills; and attorney fees.
Step 2: Oustanding Debt (mortgage, credit cards, other loans). If you’re like most people who incur debt, plan on leaving enough money to pay it off. By factoring in the balance of mortgages, credit card debt and other loans, you will spare your family the financial burden and stress of paying those financial obligations.
Step 3: Education Fund (tuition for primary, secondary, and college based on number of years and number of children). Education is expensive. Think about providing an education fund for your children. Should they be privately schooled? What will they do for college? Even if you do not have any children now, you may in the future.
Step 4: Living Expenses. Day-to-day living expenses are bills, taxes, groceries, and entertainment.
Step 5: Survivors’ Income (spouse’s income, social security, and other income). Check out the Social Security Administration’s online benefits calculator for an estimate. Other income may be pension benefits, interest, dividends, rental income, inheritances, or gifts.
Step 6: Current Assets (life insurance & liquid assets). Life insurance and other assets are used to offset the financial needs that arise when someone dies. If you already have life insurance how much will that policy pay upon your death? If you have other assets that could be easily sold to generate cash, then what is the value of those assets?
Summary: Your total life insurance need reflects the expenses your family will incur and the income they have to offset them. Immediate Expenses (step 1), Outstanding Debt (step 2), Education Fund (step 3), and Living Expenses (step 4); represents the expenses of your family. Add the total of steps 1 through 4 and write it down. Make sure to write the letter A by your number. Now add Survivor’s Income (step 5) and Current Assets (step 6) and write it down. Make sure to write the letter B by your number. Finally, subtract B from A and what is leftover if how much life insurance you still need to have.
Look how inexpensive Term Life can be:
| Monthly Premiums | |||
| Insurance Amount | Age | Male | Female |
| $100,000 | 35 | $9.61 | $9.27 |
| 45 | $13.69 | $12.41 | |
| 55 | $24.23 | $19.38 | |
| $250,000 | 35 | $12.96 | $11.90 |
| 45 | $20.83 | $19.13 | |
| 55 | $46.11 | $35.06 | |
| $500,000 | 35 | $19.55 | $17.43 |
| 45 | $34.43 | $31.03 | |
| 55 | $85.85 | $62.48 | |
The term life policy also includes the option to convert your term insurance into a guaranteed issued permanent whole life insurance plan without any new medical exam prior to the term period expiration date. Price will be determined at your current age. Contact me for a free rate quote!
Campbell & Associates Insurance Agency, Inc. is your full service agency serving OH & KY. We have over 38 years experience with successfully building and retaining lasting relationships with our policyholders and our exceptional insurance carriers who we represent. We offer exceptional products that are competitively priced and take the time to discuss your needs taking into account your budget. Visit our website for more information: http://www.autohomelife.net.
Shannon C. Campbell, BSBA, MBA, President Elect effective 9/1/2011
190 West Main Street Amelia, OH 45102. 513-752-7722 shannon@autohomelife.net
Campbell & Asssociates Insurance Agency, Inc.
