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Life Insurance - Deciding What You Need & Policy Information Gillette WY

Most financial planners will say that you should have life insurance, 5 times your annual salary. Those with more dependents may need more life insurance. Other financial planners say that you should look at the total amount of income that you want to replace between now and retirement.

Dr. Nels A. Nelson (RFC®), CFP, CSA, LUTCF
(307) 674-7494
P.O. Box 1063
Sheridan, WY
Company
New Life Financial Inc.
Qualifications
Education: BS(Engineering), Doctorate Vet Medicine, Certified Financial Planner,
Years of Experience: 23
Membership
IARFC, FPA, NAIFA
Services
Invoice, Estate Planning, Business Planning, Portfolio Management, Pension Planning, Retirement Planning, Medicaid Planning, Employee Benefits, Mutual Funds, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Medical Insurance, Group Insurance, Charitable Planning, Healthcare Accounts, Asset Protection, BuySell, Compensation Plans

Data Provided by:
United Investors Life Insurance Co
(307) 875-6957
2241 Foothill Blvd
Rock Springs, WY
 
Kevin Byrne and Associates
(307) 632-9223
202 E Pershing Blvd
Cheyenne, WY
 
Andy Steele
1285 Sheridan Avenue
Cody, WY
Company
Title: President
Company: Steele Financial Services
Type
Registered Investor: Yes
Education
B.S Florida State University
Years Experience
Years Experience: 26
Service
401k Rollover From Employer,Income for Life/ Preserve Principal,Life Insurance,Investment & Portfolio Management,Insurance & Risk Management Planning,Retirement Income Accumulation Planning,Pension for Highly Compensated Owners,Stock Market Alternative,Wealth Management,Retirement Planning,Annuity Ideas & Strategy Planning,Retirement Income Distribution Planning,IRA, 401k, Roth IRA, QDRO Rollovers,CD Alternative,Annuities,Investment Consulting & Allocation Design,Planning For Personal Finances &

Data Provided by:
New York Life Insurance
(307) 367-6792
219 E Pine St Ste Ste
Pinedale, WY
 
Farm Bureau Financial Services
(307) 632-9008
6248 Yellowstone Rd
Cheyenne, WY
 
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Life Insurance - Deciding What You Need & Policy Information

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Life Insurance - How do I decide what I need?

This is a big question. In general, most financial planners will say that you should have life insurance equal to at least 5 times your annual salary. Some folks with more dependents (older parents, children and spouse) may need more life insurance.

Other financial planners say that you should look at the total amount of income that you want to replace between now and retirement. While the numbers can be big and scary if you are young, your actual life insurance needs will decrease over time.

Let's look at an example. If I'm 25 and make $35,000 a year and I want to replace the income I'd make between now and retirement age, I'd be looking at life insurance for $848,000. Whew! Well, there are a number of concerns with that:

  1. First and foremost, can I afford the premium?
    At this age, you may be able to. The risk to a life insurance company is low.
  2. Does my spouse work?
    If my spouse does work I may not have to replace my total salary.
  3. If I have a stay-at-home spouse, would they consider going back to work after a certain period?
    If you think your spouse may want to retrain for another career you may actually need to consider more money. Or perhaps, if the total amount of the life insurance policy paid out the mortgage and put some money in the bank, your spouse could return to the workforce on a part-time basis.
  4. Am I trying to leave my family 'set for life' or am I trying to get them over a tough time?
    This is entirely up to you. Balance it out against the amount of the life insurance premium.
  5. Is it overkill?
    (Excuse the pun.)

These are questions which must be considered. At a minimum, your life insurance coverage should:

  • Fully pay out your mortgage
  • Fully pay for funeral costs
  • Allow for supplementary childcare for at least 2 years (if you have children)
  • Fully pay out any other debts, like car loans, outstanding bills from credit cards or utilities, etc
  • Leave a little something in the bank for emergencies

Does 5 times your salary meet these requirements? Great. If not, you might have to consider up to 8 times your salary. Then consider all the factors which might affect your spouse's ability to handle the situation - perhaps you've died in an accident in which they were hurt too, or perhaps you have a family of 9 children and your spouse couldn't return to work - and add additional money as required.

What about college for the kids?

...

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