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Life Insurance - Deciding What You Need & Policy Information Lincoln NE

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.

Michael Collins
6600 O Street
Lincoln, NE
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Data Provided by:
Assurity Life Insurance Company
(402) 476-6500
1526 K St
Lincoln, NE
 
Forsyth Insurance Agency
(402) 483-7861
1265 S Cotner Blvd Ste 21
Lincoln, NE
 
MHFS Agency
(402) 489-6110
2320 S 48th Ste 101A
Lincoln, NE
 
Executive Insurance Associates
(402) 465-4554
7500 South St
Lincoln, NE
 
Christopher M. Collins (RFC®), CFP, CLU, MSFS
(402) 438-5500
2200 Fletcher Ave., Suite 100
Lincoln, NE
Company
Tomorrow's Money
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Education: AA, BA, MS
Years of Experience: 37
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IARFC, SFSP
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Invoice, Estate Planning, Business Planning, Portfolio Management, Pension Planning, Retirement Planning, Stocks and Bonds, Mutual Funds, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Compensation Plans

Data Provided by:
Michael Cooper Insurance Agency
(402) 610-0274
1401 N 56th St Ste 112
Lincoln, NE
 
R Hoy, Dean - State Farm Insurance Agent
(402) 489-7171
3883 Normal Blvd
Lincoln, NE
 
Krikac, Vinnie - State Farm Insurance Agent
(402) 474-1173
935 Plum St
Lincoln, NE
 
New York Life Insurance Company
(402) 483-5444
8700 Executive Woods Dr
Lincoln, NE
 
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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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