How much life insurance you need will vary based on personal and financial circumstances, but essentially you need enough to replace your income and cover your dependents’ expenses, including future ones. Most people should aim for 10-15 times their income. WHAT! you may say? I can tell you the sad stories of people not having any life insurance or not enough either. What I can’t tell you is anyone ever complaining to me that they or their spouse have too much life insurance and here are some of the reasons why.
1- Inflation- If you take out a $500,000 30 year term policy, what will $500,000 do for you in 25 years? Not what it does today? In the past 25 years housing prices alone have tripled.
2- A surviving spouse may need to hire some help for the children?
3- Does the surviving spouse earn enough to keep the house on their salary along with food, clothing, medical, education expenses?
4- That same $500,000 30 year term policy can cost far less than that daily cappuccino out. Is that too large of a sacrifice? You would be surprised how inexpensive Term Life can be.
5- Term life is the least expensive way to purchase coverage for a specific period of time, but the downfall is that it ends at some point. We often encourage a plan that would include both Whole Life and Term coverage. But most important, you should be able to afford what you need.
We strongly recommend looking into life insurance at a young age but definitely when getting married, having children and buying homes. Many people wait to long and then they can’t buy it because they are ill with a preexisting condition or it is too expensive. So be prepared and enjoy life knowing you have a plan in place.