Life Insurance - Deciding What You Need & Policy Information Wheeling WV
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Horizon Financial Group
Education: Ohio University, BBA FinanceCollege for Financial Planning's CFP Certification Professional Education Program
Years of Experience: 15
Invoice, Estate Planning, Portfolio Management, Pension Planning, Retirement Planning, Medicaid Planning, Tax Planning, Employee Benefits, Stocks and Bonds, Mutual Funds, CD Banking, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Medical Insurance, Group Insurance, Education Plan, Healthcare Accounts, Asset Protection
Title: Investment Advisor Representative
Company: Retirement Solutions
Investment Advisor Rep: Yes
Marshall University/MS 1994
Long-Term Health Care Planning,Planning For Personal Finances & Budgeting,Asset Protection Strategies & Planning,IRA, 401k, Roth IRA, QDRO Rollovers,Wealth Management,Life Insurance,Investment & Portfolio Management,Annuity Ideas & Strategy Planning,Retirement Income Accumulation Planning,Fee-Only Comprehensive Financial Planning,401k Rollover From Employer,CD Alternative,Health Care Insurance,Retirement Planning,Investment Consulting & Allocation Design,Retirement Income Distribution Planning,H
Scott Depot, WV
Focus Financial Investment Group, LLC
Years of Experience: 29
Invoice, Estate Planning, Business Planning, Portfolio Management, Executive Compensation Planning, Retirement Planning, Medicaid Planning, Seminars Work, Employee Benefits, Stocks and Bonds, Mutual Funds, CD Banking, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Medical Insurance, Group Insurance, Charitable Planning, Healthcare Accounts, Charitable Foundations, Asset Protection, BuySell, LiabCover, Compensation Plans
Vealey Financial Services
Years of Experience: 43
Invoice, Estate Planning, Business Planning, Pension Planning, Executive Compensation Planning, Retirement Planning, Medicaid Planning, Tax Planning, Seminars Work, Employee Benefits, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Medical Insurance, Group Insurance, Charitable Planning, BuySell, Compensation Plans
Life Insurance - Deciding What You Need & Policy Information
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:
- 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.
- Does my spouse work?
If my spouse does work I may not have to replace my total salary.
- 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.
- 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.
- 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?