How Much Life Insurance do you Need?
The topic of a loved one passing away usually makes us uneasy and is not something people like to talk about or discuss. This is especially true when planning for your own passing. However, if there are people who depend on you and your income, it is critical to plan ahead by considering life insurance.
There are several things to consider when determining if life insurance is right for you:
Do people rely on you to provide for them?
If the answer to that question is yes, you have a need for life insurance. A life insurance policy pays a cash benefit to your beneficiaries when you pass away, protecting them against personal and financial strain.
To determine the amount of coverage that is right for you, identify and calculate your immediate and on-going needs and deduct that amount from your assets. If your needs are higher than your assets, the difference in value is the amount of life insurance coverage that you require. Try our simple to use needs calculator here.
Factors to consider when calculating your immediate and on-going needs include:
- Paying off debt, including mortgage, loans and credit cards
- Final expenses, including funeral costs and taxes
- Establishing an emergency fund
- Setting up an education fund for children
- Replacing a percentage of the lost income your family needs to maintain their standard of living for a certain period of time
When calculating your assets, remember to include any existing life insurance policies, such as group or mortgage insurance, as well as RSPs and savings accounts.
The next step will be to obtain quotes from insurance companies, such as ScotiaLife Financial.
Remember that some life insurance is better than none, so buy what you can afford at the time and increase when you can until you hit the amount you determined you needed.
The amount of coverage you require will change over time. Review your needs regularly, especially when a life events occurs, such as a marriage or the birth of a child.
Taking care of loved ones after your passing can be as simple as finding the right life insurance coverage for you.