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Friday, November 20, 2009
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Life Insurance 101
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Call us at (800) 940-3002
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Determining Your Life Insurance Needs
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There is no magic formula to determine how much life insurance you should have;
however, there are a number of factors that should be considered when estimating
how much life insurance you should carry. They
include:
- Final Expenses - These could be unpaid hospital bills, funeral expenses,
unpaid debts, probate costs, and estate and inheritance taxes.
- Readjustment Fund - This may be used to cushion the immediate lifestyle adjustment
that a family must make when a loved one dies. The family may be forced to move,
or the surviving spouse might have to look for a new job. In addition, a working
spouse may find it difficult to return to work immediately after the death
of a partner. The readjustment fund allows for adequate bereavement due to
loss.
- Supplemental Income - After the readjustment period, there should be a consistent
income stream to help pay for the family's living expenses, such as mortgage payments,
monthly bills, and daycare.
- Educational Funds - Adequate funds should be available for the childrens'
education. This might include elementary school, high school, and college.
- Retirement Fund - There should also be adequate funds available to ensure
that the spouse can retire comfortably.
These are some factors that you should consider carefully when estimating how much
life insurance you need. Everyone's life insurance needs are different but, in general,
an individual's needs are greatest from the time they start their careers or a family
until they reach retirement, at which time many individuals' needs for life insurance
diminish. It is important to remember that you should review your life insurance
needs annually to account for changes in your family's lifestyle. Use our
life insurance needs calculator to help you estimate how much life insurance
you require.
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