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Life Insurance - Deciding What You Need & Policy Information Missoula MT

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.

John Shellenberger
P.O Box 4758
Bozeman, MT
Company
Company: Estate Conservation Associates
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Franklin & Marshall College A.B.
Stanford University M.A.
Years Experience
Years Experience: 34
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Supplemental Medicare Insurance,College Planning,401k Rollover From Employer,Income for Life/ Preserve Principal,Medicare Planning,Annuities,Alternative Asset Class Planning,Investment Consulting & Allocation Design,Insurance & Risk Management Planning,Retirement Income Distribution Planning,Education Funding & Financial Aid Planning,Fee-Only Comprehensive Financial Planning,Long-term Care Insurance,1031 Exchanges,Wealth Engineering,Stock Market Alternative,Wealth Management,Life Insurance,Inves

Data Provided by:
Citizens Insurance
(406) 758-8220
490 W Reserve Dr
Kalispell, MT
 
Hagman John Life Insurance
(406) 434-2006
301 1st St SE
Shelby, MT
 
Bertelsen Insurance Agency & Real Estate Insurance
(406) 293-5748
319A W 9th St
Libby, MT
 
American National Insurance Co
(406) 752-8088
1325 US Highway 2 W
Kalispell, MT
 
New York Life
(406) 471-3377
2602 US Highway 2 East
Kalispell, MT
Alternate Phone Number
406-471-3377
Services
Life Insurance, Financial Planning, Financial Services Professional, Retirement Planning, Investments

Duo Financial Services
(406) 452-6918
310 Central Ave W
Great Falls, MT
 
Bishop Insurance Service
(406) 883-5372
302 1st St W
Polson, MT
 
Principal Financial Group-Mike Ostenson
(406) 294-6055
1537 Avenue D
Billings, MT
 
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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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