This is a question I hear everyday. People want to be able to get a gauge from there life insurance professional on how much coverage they should have. If you research this subject online you will find all different kinds of suggestions such as 10 times earnings or 20 times earnings. My feeling is this is an individual and personal decision. It varies on a case by case basis. Below please find some items I feel that are important to consider.
- Whether or Not You are the Sole Wage Earner: In some families, one partner stays at home to tend to the children’s needs while the other devoted their time to earning an income. If the sole wage earner is considering life insurance they need to take that into consideration and increase the size of the life insurance policy to adequately cover the income that would be lost in the event of their death.
- Whether or Not You are the Stay-at-Home Parent: At first glance it may appear as though a stay-at-home parent wouldn’t need to take out a life insurance policy. That’s not the case in that there are added financial burdens placed on a young family in the event that the primary caretaker passes away. Although the surviving partner won’t have to worry about replacing the income of the stay-at-home parent, they will have to arrange for child care costs. Depending on the age of the children this can become a substantial expense and therefore it’s wise to consider a life insurance policy for both partners.
- The Age of Your Children: If your children are young and have yet to attend college and venture out into the world on their own, you should take that into consideration when shopping for life insurance. College educations are expensive and therefore it’s important to have adequate life insurance coverage so that the surviving parent won’t have to worry about college for their children.
- Medical Expenses: Quite often when a person dies it is the result of a lengthy illness. Medical costs can accumulate quickly and unless there is a very comprehensive and generous medical plan in place, the surviving partner will have to shoulder the costs themselves.
- Funeral Expenses: Although many people don’t want an elaborate service following their death, those left behind often have a very different idea. Therefore it’s important to have enough coverage through life insurance to pay for all the aspects that are involved with a service and a burial or cremation. Taking care of this before death allows the survivors the opportunity to say goodbye in the manner they choose.
