Page 59 - Book5E

How Much Insurance Do I Need?
The answer isn’t really how much life insurance you need, but rather how much money your family will need after you’re gone. Ask yourself:
•
•
How much money will my family need after my death to meet immediate expenses like funeral expenses and debts?
How much money will my family need to maintain its standard of living over the long run?
insurance proceeds can help
Life
pay immediate expenses includ-
ing uncovered medical costs, funeral
expenses, final estate settlement costs,
taxes, and other lump-sum obliga-
tions such as outstanding debts and
mortgage balances. They can also
help your family cover future finan-
cial obligations like everyday living expenses, money for college or your spouse’s retirement, and so much more.
But how do you know if you need $100,000; $500,000; $1 million or more? The Life and Health Insurance Foundation for Education recommends conducting what’s called a Capital Needs Analysis. First, you evaluate your family’s needs. Gather all of your personal financial information and estimate what each of your family members would need to meet current and future financial obligations. Then add up all of the resources that your surviving family members could draw upon to sup- port themselves. The difference between their needs and the resources in place to meet those needs is your need for additional life insurance.
Or, another approach is to use this handy tool for estimating your need for life insurance. Remember that this tool is only intended to be a guide. It doesn’t consider every factor that might affect your life insurance needs. For a more accurate and detailed analysis, please consult a financial advisor.
Understanding Your Life Insurance Policy
51
Concern for man and his fate must always form the chief interest of all techni- cal endeavors: Never forget this in the midst of your diagrams and equations.
—Albert Einstein