Step 2. What Are My Assets?
First and foremost, it all boils down to you being a paycheck. What you earn is what keeps your loved in good financial health.
Let’s take a quick snapshot of a standard nuclear family with both mom and dad working and they have 2 kids ages 2 and 4. One parent earns $30,000 net and the other earns $50,000 net per year. Both incomes are vital to maintaining their current standard of living. That’s a minimum of $80,000 per year to maintain their standard of living.
What would happen if one of the parents died in a car crash? If their objective was to maintain the family’s standard of living until the youngest child reached age 18, then you’re looking at 16 years minimal. If each parent were to look at it from both perspectives that would work out to $480,000 for the parent earning $30,000 per year and $800,000 for the parent earning $50,000 per year.
That’s just the bare minimal amount of life insurance each parent would need just so the survivors could maintain their standard of living to reach the 18th birthday of their youngest child!
Your assets include:
- Your net monthly/ annual income or both net incomes
- Your savings and investments
- Plans you have with your employers or others you have already purchased
- Health insurance coverage
- Equity in your home
Step 3. What Are My Debts?
We earn money and most of it usually ends up in somebody else’s hands. The potential debts are what has to paid when you die and the future debts that your survivors will have to continue paying after you’re gone. And, it’s not just what you’re paying out now because you also have to ask yourself what you might owe down the road. These debts include:
- Lost income – It’s can be considered a debt if your family needs it to maintain their standard of living
- Your mortgage or rent
- Burial and funeral expenses
- Personal loans, credit cards and business loans
- The kid’s college tuition
- Medical expenses ( If you have been currently diagnosed with a disease or disability)
Life Insurance Bottom Line
It’s more of a complex formula than you may have thought isn’t it. I haven’t even factored in the cost of inflation or what you might be earning from the interest of either your saving/investments or what a lump sum payment might earn when invested.
What Type of Life Insurance is Best?
The most affordable type of life insurance to buy is ‘Term’ insurance. And, it’s cheapest when you are younger. Consider a 15, 20 or even a 30 year term now, and you won’t have to worry about the future.
Where Can I Find an Affordable Life Insurance Policy?
You always want to talk to an independent agent like myself. We can access and research dozens of companies so you are assured we will find the best policy at the most affordable rates. If you have health concerns, don’t let that dissuade you because we can give you valuable advice and help you to find a policy that suits you.
Whatever your needs or questions then please call me direct at 877 – 966 – 9383.