What do I need to think about when determining a life insurance amount?
By conducting a basic "needs-analysis", you can quickly determine how much life insurance is appropriate for you and your family. Depending on your life status, you may need a lot of life insurance to cover ongoing and future expenses, or you may need just enough to cover your final expenses.
While there are as many different life situations as there are people who live, here are a few different scenarios and the corresponding life insurance needs:
I am a stay-at-home parent.
At first glance, you may not think you need to purchase life insurance to cover your "wages". But the truth is, you have a job - and a difficult one, at that – that provides a form of compensation to your family. What you do 24/7 for your family has a cost associated with it, regardless of whether you earn a "paycheck" or not. If something were to happen to you, how would your family cover the costs associated with running the household? You will want to purchase enough life insurance to cover your family's ongoing expenses, as well as the costs associated with hiring a housecleaner, a babysitter or nanny, or even a cook, in addition to covering your final expenses.
I am a single parent.
You already know that raising a family on your own means that you have to be everything to everyone. This is why having affordable life insurance from SBLI is so important in order to preserve your family's quality of life now, as well as in the years to come. You will want to purchase enough life insurance to cover the day-to-day expenses, the mortgage, health insurance, car insurance, taxes, any debt that you hold, costs that are associated with running the household in your absence, providing for college, your final expenses, and other financial obligations that you hold.
My kids have grown, the house is empty and my mortgage is all paid up!
It's a great feeling knowing that you raised your kids and they're off on their own and not dependent on you (at least financially)! It's an even better feeling to know that your home is paid off and you can see retirement on the horizon. But even if you have planned for retirement, life often throws us curveballs that can alter even the best-laid plans. If you were to die prematurely, your retirement plan savings and social security may not be enough to cover living expenses for your surviving spouse. And even if you did save enough, you may unexpectedly experience an illness or other unforeseen expense that forces you to spend some of what you've saved. The last thing you would want is to lose your house and other assets that you worked so hard to earn. You will want to purchase enough life insurance to provide for your surviving spouse's future, as well as pay for your final expenses, taxes and other debts you may hold.
While you are alive, a portion of an SBLI whole life insurance policy's tax-deferred cash value can be used for your family's future. Click here for more information about SBLI's whole life insurance policies.
I am finally retired!
Congratulations! You worked hard and now you get to relax and enjoy all that you worked so hard to attain. You may have already protected your estate and other assets but need life insurance to pay for your final expenses and taxes. You will want to purchase enough life insurance to cover those costs as well as any other debts you may hold.
Additionally, a portion of an SBLI whole life insurance policy's cash value can be used for your family's future. Click here for more information about SBLI's whole life insurance policies.
I own my own business.
You may not immediately see the role that life insurance plays in business ownership, but the fact is, life insurance can protect your business in the event of your death, the death of one of your business partners or the death of one of your key employees. You will want to purchase enough life insurance to cover the loss you would incur if a key employee should die (also known as "Key Person Insurance"). You will also want to make sure that if you own your business with another partner or partners, they have the cash to fund a buy-sell agreement in the event of your death. You will want to purchase enough life insurance to cover these costs.
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Once I purchase an SBLI life insurance policy, do I ever have to change it?
You should view life insurance as "fluid", meaning it needs to change as you change. Chances are, when you first bought your SBLI life insurance policy, you were in a different life stage than you are currently. You may have purchased an amount of life insurance based upon your financial obligations at the time, but maybe things have changed. Perhaps you:
- Got married, divorced or became widowed
- Bought a house
- Had a child
- Changed jobs or started your own business
- Became the primary caretaker for an elderly relative
- Paid off your home
- Have children approaching college-age or already in college
- Find yourself closer to retirement
Whatever the life circumstance, chances are that you should review your current life insurance coverage to ensure that you are still appropriately insured.
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