How Much Life Insurance Do You Need?
Life insurance is an agreement wherein an insurance company agrees to pay a specific amount of money after the death of the insured individual as long as the premiums are paid and up to date.
Because life expectancy can vary greatly, it’s important to know how much life insurance you might need. If you opt for too little, your family may be left with an insufficient amount of money that won’t do them much good. On the other hand, if you opt for too much coverage, it is likely you will end up spending too much money on your insurance plan.
Age and Life Insurance
One of the biggest life insurance myths is that life insurance becomes a lot harder to purchase when you are older. While it is true that insurance coverage is inexpensive when you are younger, most companies do not deny coverage based on the fact that you are over a certain age. When it comes to life insurance, you are better off buying a policy even if you are a little older than never purchasing it and putting your loved ones in financial distress.
Here a few things you may want to consider when purchasing life insurance:
Debts: Life insurance can be used to pay off a number of debts like student loans, credit card debts, mortgages, car loans, and more. If you have more debts, you’ll need to get more coverage, and vice versa.
Income replacement: The primary purpose of life insurance is that the payout is meant to serve as income replacement for your loved ones if something untimely happens to you. So, if you are the sole provider for your family, it is a given that you will need to opt for higher life insurance coverage.
End-of-life expenses: Even if you have no dependents and are debt-free, life insurance can help your family pay your end-of-life expenses. Given that the average costs for a funeral can amount to thousands of dollars, having a life insurance plan to cover the expenses can help. In this case, you can opt for a small coverage (between $10,000 to $15,000).