Being an insurance agent I get asked for life insurance advice all the time. Whether it is a customers or friends and family there is a common thread to all the questions that get asked. To help as many people as possible I put together this list of frequently asked life insurance advice questions.
Life Insurance Advice FAQs
- As head of my household how much life insurance do I need? – While every situation is different a common rule of thumb for the main income earner in any household is to multiply your annual salary by ten. So if you make $50,000 per year you would need $500,000 worth of life insurance. This should cover a mortgage, college tuition for the kids, and leave enough for your family to live off of until the kids are out of the house without your spouse having to work.
- My spouse stays at home with the kids. Do they need insurance? While a non-income producing spouse does not contribute monetarily to the family, all the work they do will cost money to replace. My life insurance advice for a stay at home spouse is to get enough life insurance to pay off the mortgage, and pay for college for your children. This way you can take the monthly amount you were putting toward these two items and apply it toward what your family needs.
- I am single and do not have any heirs. Do I need any life insurance? The biggest burden a family takes on when they lose a loved one is the cost of a person’s final expenses. The best thing you can do to help your family is to make sure there is enough life insurance to pay for burial and any debts you have. So if you own a home make sure that your life insurance pays off the mortgage plus leaves enough to pay for you to be buried (about $10,000 to be safe). This way your family can spend their time grieving not trying to figure out what to do with you and your stuff.
- My Spouse and I both work and have no children. How much do we need? The best life insurance advice for this scenario is to determine what the financial needs are for one of you. When my wife and I were "pre-children" we had a house and no other debt. So we got term life insurance on each of us that would pay off the house. If we had had any other debts (car payment, credit cards, etc.) we would have added that amount to the life insurance policies. This way your spouse has no worries about losing the home or not being able to pay bills. Besides, you want them only grieving you not the loss of your income.
That sums up the most common life insurance advice questions that I get. If you have any other questions feel free to contact us. If you are interested in getting term life insurance fill out the form on the side of this page. If the quotes you get seem confusing we put together a guide to term life insurance quotes HERE. Finally, if you are still new to all of the jargon you can learn more about term life insurance HERE. As always, the best life insurance advice we can give is to make sure you have some.