At Money Mastery, we teach the importance of getting financial affairs organized in order to protect your assets from risk and theft and to be sure you are adequately but not overly covered in case of emergency.
That’s why it’s so important to understand your life insurance coverage. While you probably have adequate life insurance to protect your family, you may not need as much coverage as you think. You can save big by asking yourself the following questions:
- Would my death cause a financial hardship to someone? If you’re not married or you and your spouse (both of whom work) do not have children, OR your children are grown and you have a pretty good retirement nest egg, you may not need life insurance at all.
- Do I know how to buy life insurance on my own? Most people think, erroneously, that they must buy coverage through an agent. You can save money by buying insurance on your own.
- How much coverage do I really need? You probably need a lot less than you think. You might be wasting thousands of dollars a year in unnecessary insurance costs. Before another day goes by, learn how to cut your life insurance costs up to 45 percent by spending just one week reviewing your policy.
Calculate How Much Coverage You Really Need
There are lots of calculators and formulas around that can help you determine exactly how much life insurance you need. One of the best is offered by Money Mastery. Another calculator can be found at www.kiplinger.com. Or, as is commonly advised by financial planners, use the rule of thumb that your life insurance should equal 8 to 10 times your annual take-home pay.
The Hume Group, Inc., a financial educational company, advises, “Lean toward the low side of that range if:
- You have only one or two children to educate, if your spouse works full-time, or if you have a low outstanding mortgage.
- Lean toward the high side of that range if you have more than two children to educate, if your spouse does not work or works only part-time, or if you have a high outstanding mortgage.”
How Long Should You Insure For?
Remember, you don’t need life insurance if your death will not cause a hardship for others. Once the chance for hardship passes, so does your need for life insurance. Reduce coverage after your house is paid for, and your children are less dependent on you for education and other support. The Hume Group advises, “Once retirement for you and your spouse is secure, the most insurance you might need would be a small policy to cover burial expenses.”
Please contact the Money Mastery offices directly for your FREE life insurance calculator: (801) 292-1099.