Multiple of Incomes
This is a real simple way to determine what you might need:
Client 35 & under use 15 times annual income
Client 36-45 use 10 times annual income
Client 55 & older use at least 5 times annual income
Your current annual income $___________ x _____ (Factor from table)= $___________ (Needs)
Spouse’s current annual income $___________ x _____ (Factor from table)= $___________ (Needs)
or
Life Needs Analysis (LIFE)
I like this method better because it helps you really understand the “why” of your life insurance
LOANS – If you died right now how much in debt and loans (including mortgage) would your spouse(family) be left with?
INCOME – How much of your income does your spouse(family) need replaced so they can continue to live their current life style?
FUNERAL EXPENSES – How much will it cost to bury you? Remember figure more than it costs today unless you really think you will die soon.
EDUCATION – How much money will your children need to get the education you want for them?
Additional:
Did you wish to leave a legacy to any family member or charitable institution?
If that all ads up to $0, will your family have access to funds to bury you? Who will end up paying that bill.
Did you wish to leave a legacy to any family member or charitable institution?
Second, what kind
Temporary or Term insurance, in effect for a specific amount (term) of time. Typically 10yrs, 20yrs, 30 yrs. Great insurance to cover debt that will go away. Term can be layered so that one policy might expire when your home mortgage should be paid off. Another might end when your youngest child turns 25 and will no longer need support and college money.
Permanent or Whole insurance is set up to last as long as you do. You should have enough whole life insurance to cover your burial costs and any legacy money you wish to leave.
