If you were to pass suddenly away, what kind of financial burdens would your loved ones be left to bear? The cost of a funeral and burial are just the beginning for many families. They may also receive bills for medical expenses and unpaid debts, not to mention the loss of your income and uncertainty about future financial stability. Nearly everyone can benefit from life insurance, but needs vary from person to person. Continue reading to learn more about how you can calculate your own family’s life insurance needs.
Estimate Your Debts and Expenses
The first step in determining how much life insurance you need is estimating your debts. Don’t be critical of yourself, few people pass away with no debts. A mortgage is usually the largest debt a family has, and it could need repayment for up to 30 years after your passing. Other debts can also be burdensome, such as personal loans, credit card balances, and installment agreements. Add to that total the cost of your family’s ongoing expenditures, such as the cost of food, utilities and periodic expenses like school supplies and new tires for the car. Consider whether your family tends to live beyond your means or regularly adds to debt balances, as this could indicate the need for more income than you currently provide.
Determine Your Monetary Contribution to Your Family
Your personal contribution to the family is probably worth more than you think. In terms of income, it is easy to calculate how much you provide monetarily, accounting for salary and bonuses. However, there are other factors to consider. For example, would your family lose the employer-matched 401K contributions you have depended on for retirement? Would your family lose low-cost group health insurance after your passing? It is also important to consider other benefits you provide to your family such as lawn care, childcare, cleaning services, home maintenance and more. In the scenario of a family losing an unemployed homemaker, there may be no loss of income, yet the family’s expenses could increase by thousands of dollars every month simply for childcare and maid services.
Estimate Planned and Unplanned Future Expenses
While no one can predict the future, there are certain expenses you can expect to pay at some point. College tuition is a significant cost for most families with children, requiring years of planning and saving. Consider whether a loss of income could impact your children’s ability to one day attend college, as well as your family’s ability to pay for other planned expenses like weddings, vacations, and a child’s first vehicle. Remember to include the possibility of unplanned future expenses as well, such as braces, car repairs, and deductibles for insurance claims.
Ask Mooney Insurance about Your Life Insurance Needs
The truth is it is impossible to calculate exactly how much money your family will need if you were to pass away. However, it is possible to make highly educated projections based on real life circumstances. The most efficient source for calculating your life insurance needs is your insurance agent. We invite you to contact our office to speak to us about protecting your surviving loved ones with enough coverage to meet their needs. Bob Mooney is trained and experienced in calculating survivor benefits and helping our clients find the policy that is right for them. Call us today. We look forward to serving you soon.
