How Much Life Insurance Do I Really Need?

How Much Life Insurance Do I Really Need?

Life insurance is important – and worth having before you really need it. If you’re nodding in agreement but also wondering How much life insurance do I need? you’re not alone! 

Even though we can’t predict when our time is up, we can control how much of a life insurance payout our loved ones will get when we die. What better way is there to lift those financial worries from your family’s shoulders?  

How Much Life Insurance Do I Need?

Let’s get straight to the point: It can be best to get coverage that’s equal to 10-12 times your annual income. And make it a level term life policy that lasts for 15-20 years. 

Why 10-12 times your annual income? Because it replaces your salary if you die and gives your family a financial cushion to help them get back on their feet. It gives them some funds to invest, where the interest coming in every year could provide vital income in your absence.

The reason we say 15-20 years is simple: if you have young children, by the time the term life policy is over they’ll be out of college and able to support themselves. The only coverage they’ll need is during those 15-20 years in between – when they’re totally dependent on you. 

If you’re following our baby steps you’ll be busy investing your money during those 15-20 years in areas like mutual funds. So by the time your term life insurance plan is over? You’ll be “self-insured” and won’t need life insurance. 

What Does Life Insurance Cover?

If you have life insurance coverage equal to 10-12 times your annual income it replaces your income 10-12 times over for your loved ones if you die. It covers the bills, expenses and everything else essential for your dependents to get by on because you’re no longer there.

Keep these tips in mind as you calculate your coverage needs:

  • Think of life insurance as part of your overall financial plan. That plan should take into account future expenses, such as college costs, and the future growth of your income or assets.
  • Don’t skimp. Your income likely will rise over the years, and so will your expenses. While you can’t anticipate exactly how much either of these will increase, a cushion helps make sure your spouse and kids can maintain their lifestyle.
  • Talk the numbers through with your family. How much money does your spouse think the family would need to carry on without you? Do your estimates make sense to them? For example, would your family need to replace your full income or just a portion?
  • Consider buying multiple, smaller life insurance policies, instead of one larger policy, to vary your coverage as your needs ebb and flow. For instance, you could buy a 30-year term life insurance policy to cover your spouse until your retirement and a 20-year term policy to cover your children until they graduate from college. Compare life insurance quotes to estimate your costs.

Fresno Financial Consultant Takeaways 

Fresno portfolio advisor- Soutas Financial appreciated these points:: It can be best to get coverage that’s equal to 10-12 times your annual income. And make it a level term life policy that lasts for 15-20 years. If you have life insurance coverage equal to 10-12 times your annual income it replaces your income 10-12 times over for your loved ones if you die. It covers the bills, expenses and everything else essential for your dependents to get by on because you’re no longer there. Think of life insurance as part of your overall financial plan. That plan should take into account future expenses, such as college costs, and the future growth of your income or assets. Don’t skimp. Your income likely will rise over the years, and so will your expenses. While you can’t anticipate exactly how much either of these will increase, a cushion helps make sure your spouse and kids can maintain their lifestyle.

Diversifying your retirement assets among a variety of vehicles and alternatives—both insurance and investment oriented, depending on what is appropriate for your situation—may offer you a better chance of meeting your retirement income goals throughout your lifespan. We help our clients with problems sometimes associated with retirement such as stopping spend down and avoiding probate. In doing so we leverage Medicare long term care as well as risk management designed to help accomplish those goals.

When searching for Fresno financial advisors, look no further than Soutas Financial & Insurance Solutions Inc. your Fresno financial planning consultant is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning, Tax-Efficient, Strategies IRA, 401(k) & 403(b) Rollovers, Life Insurance, Annuities, Medicare, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California Insurance License # OK48173

This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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Soutas Financial & Insurance Solutions Inc. 
333 W. Shaw Avenue Suite 106
Fresno, CA 93704 
(559) 230-1648 
Soutas.com 

Our firm is not affiliated with the U.S. government or any governmental agency. Individuals are encouraged to consult with a qualified professional before taking any withdrawals from their retirement assets or insurance policies.

via How Much Life Insurance Do I Need?

via How Much Life Insurance Do I Need?