What’s The Right Amount of Life Insurance? How to Calculate Your Needs
After you decide to take the plunge and buy life insurance, it's likely that an onslaught of questions will follow: How much life insurance do I need? How much can I afford? Who really needs life insurance?
Asking yourself these questions is common. Even better, knowing how to answer them can make the process of buying life insurance that much easier. Try these five questions on for size before you apply for life insurance.
This may be one of the more important and more difficult questions to answer on your own. If you listen to enough experts, you could hear anything from just a few multiples of your salary to 20 times it. The truth is that it's a very individual calculation - we all have different circumstances, so our needs will be different as well. While you'll likely need the help of an agent in the end, getting an idea of how much life insurance you need is simple with our life insurance calculator tool. After just a few questions, we'll give you an estimate of your recommended coverage amount.
The first thing you'll need to decide is if you want a policy that remains in effect for your lifetime (permanent life insurance) or one that, after a period of time, expires (term life insurance). For many people, term life insurance maybe is the best fit. You can choose from several different term lengths and coverage amounts, helping to ensure that, regardless of what happens to you, your family will have the means to pay the mortgage, cover childcare costs and plan for college.
There are quite a few life stages that might signal to you that it's time to buy life insurance. A few of these include a new mortgage, a new baby or a new wife, but that certainly isn't a complete list. While group life insurance through your employer is an valuable benefit, there may be a significant gap between the payout from that policy and how much coverage you actually need. An individual policy can help bridge the gap
The good news is that there is a policy for nearly every budget. AIG Direct offers term life insurance plans for as low as $14 per month. The premiums you pay are decided based on your answer to a number of factors that include mental and physical health as well as your lifestyle. While it's difficult to know your premium before you start the process, it's important to know and understand your own budgeting needs and how much you can spend before you start the application process though.
If you're married and the primary breadwinner in the household, then it would make logical sense that your income would be worth protecting (and it is). Another important consideration to make, though, is whether it would be wise to have your spouse covered by a life insurance policy as well. If they are taking care of children in the home now, then you may want to consider the financial burden of having to pay for childcare in the event of your spouse's passing.
Knowing the answers to these questions isn't the end all, be all, but it is a great way to start the process of buying a life insurance policy. Start a conversation with AIG Direct and one of our licensed agents today. Helping to protect your family's financial future may be just a quote away.