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Life insurance – everyone needs it, but how much coverage do you need? Every individual has a unique situation and choosing the amount of coverage requires calculating specific factors. These include the financial obligations that would be left should you suddenly pass away, including:
To calculate your income, multiply your yearly income by 10 as a starting point. Many people may choose a longer period to replace the income you brought to provide for your family. Once you have calculated lost income, add in the balance of your home mortgage or mortgages on other properties. Now add the balance on your existing debts to the total, and finally, add the cost of sending a child through four years of college, along with the amount needed to pay for room and board during their education. You now have the basic grand total of the insurance coverage you need.
Many young families do not consider life insurance as a necessary expense, and this has led to many tragic situations. The family may be left in a very serious financial condition if you unexpectedly pass away. They have counted on your income to pay for food, housing, clothing, education, and other basic costs, which now disappears. Along with the devastation of losing a loved one, a sudden death may lead to very serious financial problems. For young families, life insurance is a must. Life insurance policies, when purchased by young, healthy people, are very affordable.
Term life insurance allows you to be covered at the lowest monthly cost but does not build up any equity. Many younger people buy term life initially, and then convert it to whole life insurance later when they are earning more. Whole life insurance creates an asset over time. It allows you to borrow from it in the future, and the coverage lasts a lifetime, but costs more than term life. If your whole life insurance matches your budget, it is always a better option. If not, buy a term life policy that can be converted to whole life when you are ready.
We invite you to meet with our local insurance agent to help you find a policy that suits your budget and provides a death benefit that will protect your family should you pass away. The funds are paid out quickly and are not taxed – a very important benefit.
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