This question requires careful consideration. First, ask yourself:
“If I died tomorrow, how much money would my family, or business partner, need?”
Insurance reduces risk and provides security for you and for your family’s future. To know how much insurance you need, you’ll need to consider your lifestyle and the possible risks that could affect it. When calculating how much life insurance you need, consider the following:
- Estate Expenses
- Funeral Expenses
- Loans and Debts
- Replacing Annual Income (number of years?)
- Children’s Education
- Resources available at death: Savings, Stocks, Mutual Funds, Retirement Funds, Life Insurance, and Other Assets
When you think of insurance, the first that comes to mind is auto and home insurance. Replacement of these assets in the event of damage can be very costly. Most people hold auto and home insurance policies.
Life insurance is essential to many families, affording extra security if the unthinkable should happen. The loss of a breadwinner is devastating enough, without having the added stress of worrying about how to cover the bills and mortgage.
Other types of insurance are equally important. Life events such as illness, accidental injury, loss of employment income, or a death in the family can affect family security. Yet these potential risks to your lifestyle can be reduced by the right insurance planning.
Changes in lifestyle also determine the types and amount of insurance you need. The amount of life insurance – and the characteristics of life insurance contracts – that you have will likely change throughout your life, depending on your life circumstances. Some of these changes might be getting married, starting a family, changing jobs or preparing for unexpected events.
Should you have Term, Universal Life or Whole Life Insurance? More information on the three types of insurance . . .
To meet modern trends, life insurance contracts can also act as investment vehicles, building up a sum of extra equity over the lifetime of the policy. This can be withdrawn or borrowed against, and usually offers a tax-free sum on retirement or death.
Deciding on an amount of life insurance you should have requires careful consideration. A Financial Advisor can help you determine just how much insurance you need, based on your age, your income, family circumstances and obligations, assets owned, and debts owed.
Question or concern about how much you insurance you need?
Call Firth Bateman: (604) 591-1336
Life Insurance Services