Russ B
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Typically, 3 to 5 times your annual income. Could be less or more depending on various factors such as family/kids, house payments, outstanding debts. |
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Mark S
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Why do you believe you need insurance? Do you have dependants who would need to live after your passing? Are there no people who depend on you?
These are the first three questions we, here, need you to answer. Your question, while valid, is vague. There is not enough info to give good, you-specific, advice.
Answer these next questions and you'll be a little closer to your answer.
1) Do you want all your debt, minus mortgage, paid off? How much is this total? Round it off, it doesn't have to be exact.
2) After all debt, including mortgage, how much would your dependants need to equal the quality of life you now have? Meaning: With all debts gone, how much would surviving spouse need if A) they would still be working or B) they would not be working? This will cover ALL living expenses minus ALL debts. This ends up being, somewhere between, 8-15 times your annual salary.
3) Do you want your mortgage paid off?
4) Do you want to take care of your children's education? Consider public approx. $8-10k per year per child and private $ 20+ k peryear per child.
5) Final expenses. Do you want this taken care of? Average cost is now around $6500, less if you want cremation.
If you want max protection for as little as possible, please consider ONLY level term insurance. Insurance and investments were NEVER meant to be combined. The only one whole life, variable and variable universal helped was the insurance companies. Insurance should be considered a temporary means to an end.
Early on you have a lot of debt, kids, gotta take care of their education and a mortgage. You probably do not have enough in liquid assets to cover all of the above areas. Insurance, level term, is the only way to do this most effectively.
Later, as you are set to retire, you had better have planned well.Saving up as much as possible. With the right plan, you should have accumulated enough to cover ALL living expenses for 15-30 years. This plan should have taken into account burial. If your advisor set you up with your own personalized plan, then you are now self-funded until death. Now, you DO NOT need insurance. You cannot buy groceries with insurance, correct? So you do not need insurance because you are self funded, kids are grown- hopefully out of the house, education is taken care of, debt has been eliminated and the mortgage is paid.
If this makes sense, please let me know. I will try to set you up with the nearest representative that I know of.
For additional info about whether to get term or any of the whole life products, please see article below: |
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financial advisor
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It varies upon how much you make, when you plan to retire, and longevity of your family.
This online program will help you figure it out.
http://www.wslife.com/education/financialTools/survivor/default.asp
Avg. funeral right now is $8400, and does not include a headstone or vault. Figure $10,000. Funeral costs go up around 5% per year.
Most importantly, figure how much you will make before you retire.
If a person makes $50,000/yr, and will retire in 20 yrs, they will be worth, exluding inflation and raises, $1,000,000 to their family. Over $2,000,000 by the time you figure in inflation and such.
Use the following link, and you will have your answer in black and white, because after all, life insurance needs are different for each person.
Someone stated that you would not need insurance at some point in your life. Just pay for it out of your pocket.
As a financial advisor, I can assure you, that is not a good investment option. Here is what I mean.
If you can purchase $50,000 of whole life insurance for $70/mn, and have it paid up in 20 yrs, you will have paid $16,800 over the 20 yrs. It will still be worth AT LEAST $50,000. In 20 yrs, a funeral is projected to cost $26,533 @ 5% annual inflation rate for funerals.
So now, you paid $16,800 and your beneficiary will receive $50,000 TAX-FREE, and which means after you figure in your expense for the cost of the insurance, they will $33,200.
So which is the better investment? Spending $16,800, and KNOWING it will double in value to your family in 20 yrs, or spend $26,533 out of your pocket, which is almost $10,000 MORE THAN IF YOU BOUGHT THE INSURANCE?
I'm sure that is what your advisor has told you, but it upsets me when an investment advisor does not do the right thing for their client.
Suzie Orman comes to mind. "Buy term, invest the difference", but what she doesn't say is that at the end of the term, if you convert your term to whole life, it will cost more because you are older, or if you try to get another term, if your health isn't good, you won't qualify for life insurance.
You have to have a strong foundation before you build your financial structure. |
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stephenweinstein
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If married to someone who works outside the home and would continue to do so if you died and you have enough savings to cover burial expenses, none.
If married to someone who works outside the home and would continue to do so if you died and you do not have enough savings to cover burial expenses, then enough to cover burial expenses.
If spouse does not work outside the home, or would stop doing so if you died, then enough to cover family's financial needs until spouse began to work outside the home (or resumed doing so), typically when children become old enough to stay home alone. |
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str8putter
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Everyone needs life insurance.. Mostly at least 3-5 years of income ... so if you make $ 50,000 a year it would be reasonable to get at least 150,000 or 200,000 to cover .
Final expenses
Burial plan
Mortages..etc..
and for your family to be able to cover all the little things that you will leave behind |
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Christie
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You need enough life insurance to cover your burial expenses - $10,000 should do it, but it won't be real fancy. That's the minimum amount you should have. If you are married and/or have children, you'll want money to help your family, especially if you are the primary bread-winner. Once you're gone, how will your family pay the rent? And you may want money to help send your children to college.
I am married with a child. I make $50,000 a year, and my life insurance is 2 x salary, or $100,000. This isn't going to take care of my family forever if I die, but it'll bury me and provide them with a little money for expenses, and to get my son started in college. |
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saberhilt
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Simple tool.
the L.I.F.E. analysis
Liabilities: Home mortgage, Car Notes, Student loans, etc.
Income Replacement: 5-10 times your annual Income
Final Expenses: $10-25k for burial plot, casket, etc.
Education: Education costs for your spouse to retrain for something higher paying and/or for your kids college education.
Simple numbers:
$200k Mortgage + $25k car note + $50k income x 10 years +$15k Funeral + 2 kids x $20k/year x 4 yrs of college =$900k!!! |
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MsMiss
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figure up these #s
cost of final expenses (services, burial, cremation, etc.)
+
50% of college tuition (if you have kids)
+
annual income x3 (your family will lose that when you pass & need to get re-established, about 3 years)
=
TOTAL AMOUNT OF PERMANENT LIFE COVERAGE
remainder of mortagage (only your contribution, if married)
+
any other debts left to your spouse (he/she will have to assume those payments)
=
TOTAL AMOUNT OF TERM LIFE COVERAGE (the term should equal the finance period; sometimes more than 1 term policy is necessary to be economical and sensible)
*The plan is to not leave your family with unplanned debt and try to adjust things, financially, so that they can maintain the lifestyle they are accustomed.* |
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CPA/PFS
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If someone, anyone ... say a spouse or a child is dependant upon your income ... then you need enough so that the earnings would be sufficient to replace your income.
As a rule of thumb ... 10 times your salary. If you are a conservative investor, 12 to 15 times. Think of it this way. If you earn $75,000 a year ... and you feel you could earn 8% ... you would need $937,500 to earn it. If you feel you could earn 10% ... you would only need $750,000. If you have some cash set aside, that is not in a retirement account, then you can deduct that.
If no one is dependant on you ... then you only need enough to bury yourself. If you have the cash ... then you don't need life insurance. |
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aaron p
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How much you need really depends on why you need it. More details please.
As an analogy, you might say 'how much horsepower do you really need?' Honda Fit works just fine if you are just commuting. If you need to tow a 30' boat, that's a different story. |
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financiallyfocused
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Insurance is only needed if you have others (spouse, children, etc) that depend on your income and would be drastically affected in the event of your death BEFORE you accumulate lots of cash.
If that is the case then you will need 8-10 times your yearly income (i.e 40k/year you would need 400k in place) preferably in a 20-30 year level term and you need to be investing in mutual funds
Stay away from Whole Life, Universal Life, and Variable Life Insurance products get only 20-30 year level term. |
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periwinkle
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in underwriting, we do have a formula for computing the maximum amount of life and accident coverage one can get. it depends on your current age and annual income. other factors declared are also included in the risk assessment. |
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jonas_grant
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Depends - you haven't provided anywhere near enough information. Could be none or $20 million based on what you have provided. |
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catzrme
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Three times your annual salary. That is usually the norm. |
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littleblooeyeddevil
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none cause if you work for a company like walmart they would take it from your family anyways. |
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lek
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I guess it depends on what kind of insurance. Health, Life, (term or whole) car? |
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