Life insurance is a strategic and important part of financial planning, but it often gets overlooked in the wake of more pressing expenses. But if you don’t have life insurance at all, or you don’t have enough life insurance, you should get on the phone with a Louisiana Farm Bureau Insurance agent right now! You will never again be as young as you are at this moment! The younger you are when you purchase life insurance, the lower the cost.
Sometimes it’s hard to know how much life insurance you really need. There are a few different angles to consider.
What Should My Life Insurance Cover? Factors to Consider:
Have you considered what happens when you’re gone? The average burial costs $15,000 for preparation, viewing and burial. Cremations are more affordable but still steep. Loved ones can expect to pay about $4,000 for cremation. So first off, you and your immediate family members all need life insurance policies that cover funeral expenses.
Do you have debt? Most of us do. Unfortunately, that debt doesn’t just disappear in the event of your death. It becomes part of your estate, which means the executor of your estate is responsible for ensuring it gets paid.
Mortgage and home equity loans, private student loans, vehicle loans, and jointly held credit card debt all get passed to your next of kin in the event of your death. To avoid unduly burdening them, make sure your life insurance policy covers all your debt.
The Financial Well-Being of Your Dependents
Your family depends on your income. Would would happen if that income suddenly didn’t exist?
First, make sure your family is fully protected by figuring out how many years they will need your financial contribution. Is your spouse expected to live another 40 years? Do your children still have college and graduate school ahead of them? Maybe they still have middle and high school to go, and all the expenses that come with that—food, clothes, sports, dance lessons, summer camp, etc.
Take the number of years the youngest member of your immediate family will require your financial support, and then multiply that by your annual salary. Now add one more year’s salary per decade, to account for inflation. If you plan to be responsible for higher education, add an additional $100,000 per degree.
Don’t Forget Pets
Estimate how much you spend per pet, per year. Add up all those vet visits, heartworm pills, food and boarding costs. A dog may cost up to $20,000 over the course of its life, which is a sizeable expense!
Add all four of these numbers together. You’ll need a policy that covers this grand total.
A safer way to protect your loved ones, savings and investments.
Unlike your other assets, creditors can’t touch life insurance as long as your beneficiaries are still living.
If you have any questions, one of our agents would be happy to help you figure out exactly how much life insurance you need. Get in touch today!