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I've seen a few things recently that really tick me off and I thought it was important that I speak up before someone makes a big financial error that could potentially hurt them and their families later in life. Awhile back I read a page on the internet that, unfortunately, I'm unable to share for fear of being sued, that said that you only need to have life insurance in the amount of three times your annual income. This bothers me and no, not because I tell people that people should have more than that as a guideline but because every family and individual are unique and have different personal needs, family needs and obligations. It's highly unlikely that a qualified life insurance agent would intentionally lead you to believe this to be true. Why? Read more. Here's a brief example of why this couldn't work most families Let us say that we have a family of mom, dad and two kids where the children are young, ages 7 & 5, respectfully. The wife is a housewife and has no job experience other than working at KFC as a teenager, which was a few years back. The husband is the breadwinner and makes a decent income of around $60,000.00 annually and, like many of us has bills to match that annual income. They live in a nice family home that they're buying, have two car payments Health Insurance which, even though it's included as a employee benefit for himself (after deductibles), he still has to is required to} pay to have the family covered. They also must pay car insurance for two cars, life insurance for four people, in multiple amounts, homeowners insurance, dental coverage and don't forget all of the other regular expenditures such as food, clothing, utilities, ect. Also, they need to send money each month to pay for their mother who is in a care home. There are many variables that could be thrown into this and I could easily add more and more monthly bills but do you see how these bills added up for this family? This may even be similar to your own circumstances, give or take. In the event of this man's untimely death do you really think that three years worth of his annual income would be enough life insurance for their family? Let's do some figures. With the man of the home earning an annual paycheck of $60k that times three years would give their family $180k worth of life insurance. This could probably be stretched into four years worth of living money considering that the man of the house is now gone, but that only brings the little one's to the ages of 9 and 11, what now? It's possible that the man might have allowed for this event, even beyond normal life insurance, by also taking out a "Mortgage Life" policy that would pay off their home in the event of his death. He may have also made allowances in the car contracts. But what if he didn't? Even though he had done this it still might have stretched the family living expenses another 3, maybe 4 years, depending on how much they cut back on unnecessary things. That would bring the children to the ages of 13 and 15 years old now. What about the next five years until the youngest child turns 18? What about college for the two of them? Do the couple's parents have burial insurance? They may not if this couple is already sending money each month for the mother's nursing care. This is all simply a quick example of a common American family, but I wanted you to realize and really think about these things. The only way that you can determine how much life insurance is enough for you and your loved ones is to actually sit down and look at every bill that you now have the bills that you know will be there in the future, all of the variables that could happen (if these didn't happen there might not be a need for insurance) and then when you think you've got a good number add 20%, just in case. It's always better to have more than enough than not enough. If you are the breadwinner of your family wouldn't you want to know for without a doubt that your family was going to be okay in the event that something happened to you, no matter what occurs? I thought so, me too. The only point that I'm trying to bring to your attention is to not let someone else pitch to you how much life insurance you need. Sit down with your other half and then contact a qualified agent. Get it right the first time because, unfortunately, there is no second chance in these life and death circumstances.
Article Source: http://www.financemanual.com
Joe Stewart is a former Life And Health Insurance Agent. He's made learning life insurance easy. Read detailed explanations about life insurance at his website TheLifeInsuranceGuys.com or by clicking on Term life insurance quotes
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