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DO YOU HAVE ENOUGH COVERAGE?

When it comes to life insurance, one of the most important questions to ask yourself is: "Do I have enough coverage?" Ensuring that you have adequate protection is crucial for your financial security and peace of mind.

Begin by considering the amount of income your family would need to replace in your absence to uphold their current lifestyle—generally, it’s advisable to aim for coverage that matches 5 to 10 times your annual salary. Factor in any outstanding debts, like a mortgage or student loans, as well as final expenses such as funeral costs. Additionally, don’t overlook future goals, like funding your children’s education and supporting your spouse’s retirement savings. Review any existing coverage through employer-provided policies or personal plans to ensure they meet these needs. Lastly, take into account inflation and the potential rise in costs over time. If you’re uncertain about whether your coverage is adequate, consulting a financial advisor can offer valuable guidance and help you craft a comprehensive plan tailored to your unique needs.

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What is the Proper Amount of Life Insurance For You?

There is no simple formula that can answer that question. For many people, buying a life insurance policy is a smart move that will ensure financial coverage for family and loved ones. 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.

However, simply multiplying your income by a certain number doesn't provide a complete estimate of how much your family will need. And if you're a parent, you likely need life insurance even if you don't work outside the home and earn an income. You should have enough coverage in that case to cover the cost of services you provide the family for free, such as child care.

5 Question to Consider Before Deciding How Much Coverage You Need

How much money would your family need today to live on if you didn't make it home from work?
What assets do you have now?
How much debt are you carrying?
Do you have a stay-at-home spouse?
Have you factored in additional expenses unique to your situation?
Do you have a pension or a qualified retirement plan?
Do you own Healthcare benefits for critical or chronic illnesses?
Have you maxed out your IRA?
And, yes, so much more!

These are just some of the questions to consider when estimating how much life insurance to buy. By doing a bit of homework and with a solid set of numbers in hand, Financial 411 can help you determine the best policy type for your family. Schedule your complimentary 15-min Strategy Session Today!