Life Insurance: How Much Do You Need?Submitted by Castlebar Asset Management on July 12th, 2016
Guest post from Clint Haynes, financial planner in Lee’s Summit, MO and owner of NextGen Wealth.
If you have dependents to provide for, or you have debts to pay and don't have adequate savings set aside, there’s a good chance you need life insurance. One of the most frequently asked questions I hear when talking with clients about life insurance is: "How much life insurance do I actually need?"
Unfortunately, there is no magic formula or one-size-fits-all answer to that question; the amount will be driven by your specific situation. The following questions are helpful in guiding us toward a coverage amount:
1. Do you have debts that should be paid off with insurance proceeds at your death?
2. How much of your income does your family rely on for living expenses? Put another way, how much money would your loved ones need to replace some or most of your income if you were to die next month, or next year, or in ten years?
3. Will your loved ones need to rely on life insurance proceeds to pay for funeral and burial/ation expenses? This January 2015 article from Kiplinger's provides information about all of the expenses that need to be factored into the cost.
4. Do you already have some life insurance coverage, either through an employer or through one or more policies purchased individually?
5. Do you have funds set aside for retirement, children's education, and other future goals?
The answers to these questions will help drive the discussion about life insurance. From there an insurance professional can help by exploring options to meet your need for coverage. Insurance needs will change over time, so it is important to revisit these questions and calculations periodically to ensure coverage levels are still appropriate.
This is a guest post from Clint Haynes, financial planner in Lee’s Summit, MO. He is also founder and owner of NextGen Wealth. You can learn more about Clint at the website NextGen Wealth.
Clint Haynes is not affiliated with Castlebar Asset Management, LLC.
Please contact Castlebar Asset Management at 913-871-7980 or by email to discuss your financial planning and investment management needs. You can sign up for our monthly newsletter here. Follow me on Twitter @CastlebarAM.
Disclaimer: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.