How much should you spend on groceries? Should you upgrade your family car to a newer model? Am I paying too much for electricity? When you consider how many things in your life need planning, it becomes apparent that life insurance is no different.
You can get a relatively accurate value with a few variables such as your income, dependents, debts, investments and mortgage balance.
Perhaps, one of the most important aspects in coverage calculation is income. Particularly, if people depend on you and your support stream, stopping that stream can leave a loved one in despair. With this in mind, make sure to input an accurate value into the calculator.
To calculate your annual income, multiply your check by the amount of pay-days in a year. If you take home $2,000 bi-monthly, multiply by 24. $2,000 x 24 = $48,000
If you make $20 an hour and work 37.5 hours per week, 52 weeks a year, then your salary is $20 x 37.5 x 52 = $39,000.
Next, input the number of people who depend on you. Naturally, dependents and/or children greatly have an impact on your coverage needs. Children not only need food, water and essentials, they need education. Education can be pricey, and this calculator definitely takes it into consideration. When all is said and done, this tool will be a valuable asset to keep protecting the wellbeing of your loved ones as well as your legacy.
When calculating your coverage, consider this...
Don’t just calculate your life insurance for its own sake. Instead, make it a part of the bigger picture. Call it a financial plan. Account for your lifestyle, your future expenses, growth and any other investment that you did not consider.
Use the most important resource you have; people. Don’t stay in a bubble, ask your beneficiaries. Remember, you’re alive and kicking! Your spouse and other loved ones might help you decide what would help them in the event of your passing.
Keep in mind that time flies. Consider the term length, as it is just as important as the benefit amount. You don’t want to get caught short or have to take on a larger premium at a later age.
Most importantly, don’t skimp or try to save money unnecessarily when it comes to something as important as life insurance. Buy more coverage than you think you might need. Not only does a cushion help, but consider inflation and salary raises. All in all, smile and take the first step to peace of mind with a life insurance solution.