Too little or too much? How do I know how much is right for me?

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How many you want is not necessarily how many you need.

The answers to the common question of how much coverage is the right coverage is as varied as the variety of cookies there are in this world. But insurance is no cookie business. In the event of a crisis, your life and your entire well being depends on how you are covered. You need to consider a number of factors while deciding what types of coverage you need and how high your coverage limits should be. In this post, let us look closely at Life Insurance and gain a general perspective of how to decide what is best for you.

Life Insurance

Life insurance is a topic that most consumers do not like to think about or talk about. Research shows that 1 in 4 consumers have no life insurance at all. So who needs life insurance? The simple answer is, if you have anyone dependent on you financially, you need life insurance. Many Americans get their insurance through their employer only while they are employed. Fewer than half of Americans between ages of 25 and 64 have their own policies. But according to new data, they are not financially prepared in case of a death and would need to make significant financial changes if it occurred.

So how much insurance do you need?

Some expert guestimate that you should have enough life insurance to cover five to 10 times your annual income. That’s just a guess. The answer really depends on how much money your family and/or dependents will need after you are gone. There are three key steps to determine the amount of insurance that is right for you:

Evaluate your family’s needs: How much money does it take to run your household? All kinds of medical expenses, mortgage payments, funeral expenses, estate taxes should be taken into consideration while deciding on this need. Equivalent sum of all that will give you an idea of how much life insurance you may need.

Consider future financial obligations: Future financial obligations include college tuition for kids. If you intend to help your kids with tuition and fees, it is a wise idea to include that as well. Add all you family’s financial goals and cash-flow needs and decide on an estimated amount of money that your survivors would need.

Tally up available resources: Look at your family’s income. The difference between your family’s financial needs and available resources will give you an estimated amount of how much life insurance you may want to get.
Once you determine the need, you have options to choose what type of Life Insurance you need. The two most common types are Term Life Insurance and Whole Life Insurance.

Term Life Insurance: Term life insurance is a type of policy where the protection is available only for a fixed amount of time that you choose right at the start. The benefits of the policy are available only in case of a death of the policyholder during the term period. The terms generally range from as less as 5 years to as long as 50 years. Once the term is complete, the beneficiary does not receive any payout even if the policyholder died just a day after the completion of the term.

• Provides coverage for a specific amount of time
• Has a monetary value that is paid to the named beneficiary in the event of the policyholder’s death
• There is a premium paid on the policy each year in order to keep it active
• This form of insurance does not grown in cash value and is not used as an investment

Whole Life Insurance: Whole life insurance is a type of policy that offers coverage for your entire life. This is an indefinite policy where an individual needs to pay monthly premiums to an indefinite time.

• Also considered “permanent” insurance
• It is in effect for the life of the policyholder, as long as the premiums are paid when specified
• It also pays on the value of the policy upon the death of the policyholder
• It grows in value over time

It is obvious that there are upsides and downsides to every policy. It is in the hands of the applicant to make an informed choice instead of a random guess with the advice of the professionals.

We hope this information helps you with your insurance choices. As always, please sign up at InsuredMine , one of the most reliable insurance management system for life insurance and let us help you manage all your policies in one place, taking the guesswork out of insurance. InsuredMine is a unified CRM platform for managing all life insurance policies. For insurance agents, who are selling life insurance policies, for them this platform is an obvious sales tool for Life insurance policy dealings.