How much #lifeinsurance do you need? #retirement #peaceofmind #legacy

*Cover pic via Life Happens

Determining how much life insurance you need depends on several factors related to your personal and financial situation. There exists numerous variables that have great impact on the final number/estimate. Here are some steps to help you calculate the appropriate amount:

1. Income Replacement:

   • What stage of life are you in? Strongly consider how many years your dependents will need financial support during and beyond dependency stage,

   • We practice coverage should equal 8 to12 times annual income for stay-at-home parents, allotting for coverage upon their passing. After all, their role is huge.

   • Strategies include utilizing a term/permanent insurance policy 'blend.'

2. Debt and Liabilities:

   • Very important section and state laws may have an impact as well (i.e. Kentucky).

   • Include any outstanding debts such as a mortgage, car loans, credit card debt, and personal loans.

   • Ensure your policy covers these amounts to prevent your family from inheriting debt.

     *It is vital you check state laws to see how debt is treated upon passing of a close family member.

3. Education and Childcare Expenses:

   • Strongly consider if the child(ren) are special needs. Also prepare for those children if something were to happen to you. This is vital.

   • Estimate the cost of future education for your children, including college tuition and other related expenses. Try to research the astronomical increases in national averages of tuition and cost of living on campus.

   • Consider the cost of childcare if applicable.

4. Final Expenses:

   • Include costs for funeral and burial expenses, which can range from $10,000 to $20,000.

   • Close family members should grieve not become fundraisers.

5. Savings and Investments:

   • Account for any savings, investments, or other assets that could offset the need for life insurance. Or, how life insurance could positively impact your retirement and your legacy.

6. Inflation and Future Needs:

   • Consider potential inflation and changes in your family's needs over time. "Expect the best but prepare for the worst.' -Tiger Woods

Individual cases and planning designs are impacted by numerous factors that deserves due diligence and professionals have a fiduciary responsibility to properly review by and with materials to fully engage in consultation. Advocate Insurers qualifies as such and doing right by the client will never change.

Industry averages suggest 10-15 times a person's annual income. Another method of calculation is the DIME method (Debt, Income, Mortgage, and Education). Ultimately, the amount of life insurance you need depends on your specific circumstances and goals. As your trusted providers and team of experienced professionals, we can assist. We can even help you turn that policy into a tax-free income stream.