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Oct 05 2016

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How Much Life Insurance Should You Buy

How Much Life Insurance Should You Buy

If you are looking to purchase life insurance, how do you determine how much to buy? The first step is to determine what your needs are.

Here is a very simple case study to demonstrate the process.
In this case study, the client assets are $50,000 of group life insurance and a home valued at $300,000. The clients debts are a $200,000 mortgage, $25,000 car loan. He wants 10 times his after tax income ($45,000) to support his wife, should he die prematurely. He estimates a funeral would cost $10,000. He wants his daughter’s education to fully funded at $100,000.
 
After subtracting the clients liabilities from their assets ($785,000 – $350,000), we determine $435,000 of additional life insurance is needed. Using Life Design Analysis software, we can see the results in the chart below.Life Insurance Needs Analysis

Once the true needs are determine, then various life insurance solutions can be evaluated to determine what product is best and fits within the clients budget.

Click here to download the PDF report for this analysis.

 
If you are uncomfortable doing this analysis yourself, please contact me, to have your situation reviewed.

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