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Life
Insurance Needs Estimation
Most families know they need
some life insurance. They
have probably had a friend
or family member who was in
financial trouble after a
breadwinner died, and then
they decided that they would
never want to put their own
family in that bad situation.
Or maybe they were just raised
with parents who always kept
a current life insurance policy
and taught them the value
of protecting their loved
ones, so they did not have
to personally witness a tragedy.
However, many people put off
the purchase of a life insurance
policy just because they really
do not know how much life
insurance to buy, or because
they have other simple questions
about life insurance.
If you do not know how much
life insurance to buy, let
us take a simple approach
to figure it out. |
I think
a good place to start is with
money owed on a home, or with
rental payments that need
to be made into the future.
If a family has only one breadwinner,
or if the other parent does
not make enough income to
pay all of the bills, it is
really important to have the
security of a place to live.
If the house could get paid
off, or if money could be
saved in an interest bearing
account that could be used
to pay the mortgage or rent,
that will cut a large obligation
out of the monthly bills.
Even if the family that is
left decides they just cannot
afford the home without the
main breadwinner, extra money
will give them time to sell
that house and move into a
more affordable house.
Next, look at debt. Debt payments
can really eat into monthly
budgets, and poor credit from
late payments hurts worse.
So if one provider would pass
away, it would be great to
have a way to pay down debt.
Having a home and reliable
transportation all paid off
is a great comfort. Being
able to pay off unsecured
debt would reduce the burden
of many families that might,
otherwise, be in trouble.
Future eductation expenses
should be considered. Lots
of people think of the children's
eduction, but they may not
think of the spouse being
re-educated so he or she can
make more money in the future.
Along with that expense, may
come additional child care,
help around the house, and
help with repairs. Even if
the spouse that passes away
is not a breadwinner in the
home, they do perform services
that will need to be replaced.
Can you imagine how much it
would cost to replace the
taxi driver, housekeeper,
cook, and baby sitter that
many people call a wife! Likewise,
husbands are likely to perform
routine repairs around the
house, and believe me, it
is expensive to hire a professional
to do them.
And of course, final expenses
need to be considered. Funerals
average 8 thousand dollars
in the US, and can costs much
more in some areas. Other
items, such as medical bills,
travel expenses, and possibly,
transporting the body can
come up after an unexpected
death.
You need to think about how
certain bills could get paid
if one breadwinner would pass
away. Balance this need against
your current budget. If you
purchase more life insurance
then you can afford right
now, then you are likely to
drop the policy when the first
unexpected bill comes up.
Of course, a dropped life
insurance policy will not
do you any good at all. |
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