Many people do not like talking about life insurance; in times of health and relative ease, it can be an uncomfortable conversation. Moreover, the complexity of determining exactly who needs it and how much they need can be a little overwhelming. The number of people uninsured or underinsured continues to increase as more and more people forgo it altogether, unsure of where to find reliable information regarding life insurance. To help answer the first question, anyone who has financial dependents but does not have enough savings needs life insurance. Life insurance gives you peace of mind through the knowledge that your dependents will be financially covered even after you have left them.
In the past, the formula for “how much” was seven to 10 times one’s total annual income, but that left many underinsured. It is good to keep in mind that there is no one-size-fits-all when it comes to life insurance. Take time to crunch the numbers and discuss your family’s needs with your spouse to come up with a reliable estimate.
Now that you understand why you need life insurance, below is a simple, four-step guide to help estimate the amount of life insurance you need.
You can opt to add a critical illness provision to your life insurance policy. This will give you peace of mind, knowing your family will be financially protected if you suffer a critical illness and cannot work. Critical illness insurance policies cover illnesses such as cancer and heart disease. After you have taken life insurance, you should keep reviewing it on a regular basis so that, if your circumstances change, it will still offer sufficient protection to your family.
