Most people don’t want to think about life insurance too soon because it gets them thinking about when they die and leave their loved ones behind. Even though it’s something most people don’t want to think about, it’s important to think about and plan for sooner rather than later. There are many life insurance policies and ways to calculate how much life insurance might be right for you.
Types of life insurance policies available
There are two main types of life insurance policies available on the market. The first is term life insurance. Term life insurance only covers a certain time rather than the rest of your life. This option does not come with the option of building cash value as the permanent option does.
The second type of life insurance is permanent life insurance. Permanent life insurance is set in place for the remaining part of your life instead of a set time. With this comes a premium rate that is set at a fixed rate. Unlike term life insurance, permanent life insurance builds up cash value.
Important things to consider
On top of deciding whether you want term or permanent life insurance, other things are also important to consider.
- Your policy should include enough to pay off your debt in full, plus a little extra for interest.
- Income replacement for dependents if you are the sole income provider
- Only insure people who would be a financial loss to you if they died.
Calculating how much life insurance to get
There are a few different ways to calculate the right amount of life insurance that you should have.
- Multiply your annual income by 6-10 and add 100,000 per child.
- Multiply the annual salary by the number of years left until you retire.
- Take the amount of money survivors will need to maintain a standard of living and multiply it by 20.
- DIME: Debt, Income, Mortgage, Education
Contact us today for a quote at Family Insurance Associates in Ruidoso, NM.