How much do I need?
The best way to determine your life insurance needs is to have an insurance professional conduct a Financial Needs Analysis. First, estimate what your family members would need after you're gone to meet current and future financial obligations. Then, add up the resources your surviving family members could draw upon to support themselves. The difference between the two is your need for additional life insurance.Though the calculation sounds simple, it can get quite complicated. That's why it's always advisable to consult an insurance professional for a comprehensive needs assessment.Seeking professional advice can help you avoid the biggest mistake most people make: buying too little coverage. The average adult only has coverage equal to three times his or her annual income. When you consider all the things that life insurance proceeds need to fund and how long the money will be needed, you realize that your true need for coverage is often 10,15, or 20 times your annual income.
What kind should I buy?
The main reason to buy life insurance is for the death benefit: the lump-sum payment your beneficiaries receive when you die. It's the core reason, but not the only one. Some types of life insurance offer other features that might play an important role in your financial game plan, such as the ability to accumulate cash value that grows over time. The chart below outlines the main differences between the two main types of life insurance. Whether to buy Term Insurance, Permanent Insurance or a combination of the two, depends on your financial goals and circumstances. A life insurance professional knows the questions to ask to help you figure out what kind is right for you.
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