You know you are an adult when you start looking at Life Insurance. For some, that may be when a new home is purchased. For others, it may be when a baby is born.
If someone will suffer financially such as a spouse or a child if you die, there is a very good chance that you need life insurance. The need is there because it will provide an immediate cash benefit to your loved ones after your death.
When purchasing a life insurance plan, a question that often comes up is how much life insurance is needed. The question isn’t really about how much you need, but how much capital your family needs at the time of your death. What you really want is to provide a death benefit that allows your spouse and your children to continue their lifestyles without the worry of money.
September is Life Insurance Awareness Month. Throughout this month, the focus on many blog posts will be Life Insurance and today the focus will be on calculating how much life insurance you need for your family.
To answer this question, let’s use the DIME formula. DIME stands for debt, income, mortgage, and education.
Debt – Add up every debt that you have not including your mortgage. Student loans, car loans, and credit card debt are just a few to consider. You also need to add in the estimated cost of your funeral expenses. Currently, funeral costs are ranging anywhere from $7,000 to $12,000 depending on the type of funeral you want.
Income – How long will your family need the income you earned? If your children are still in school, how long will it be before they finish high school? Multiply that number by your annual income to compute your income replacement needs.
Mortgage – How much do you owe on your mortgage? Add this amount into calculating your life insurance needs.
Education – Estimate the cost to send your children to college.
You also need to consider how much you have in savings. This amount can be deducted from the total of your DIME expenses.
Another consideration is to realize that even if you do not earn an income but contribute to the family by staying home and caring for the children (we are seeing an increase of stay at home parents and home schooled children), life insurance is a must.
According to a 2016 Mom Salary Survey from Salary.com, if you were to try and replace what the stay at home parent did and put a dollar amount to it, the salary would be just over $48,000 a year. Add overtime which we know happens all the time with stay at home parents and the salary would be $94,000. That “salary” would have to be paid out if there was a loss of the stay at home parent.
The important step here is to take the first step and reach out to Balanced Care.
Balanced Care can help you calculate your Life Insurance need whether you have a family, a business, or are just an individual wanting to protect the assets you have.
We realize that very few people are excited about purchasing Life Insurance and even thinking about the possibility of death. We also realize that reality hits hard with sudden deaths every single day.
Protect your loved ones on this journey of life. They deserve to be taken care of while you are here and deserve you know you cared enough to take care of them even when you are gone.
Terri Trepanier is the owner of Balanced Care Health and Supplemental Insurance and a licensed insurance consultant and broker with Associated Brokers. Licensed in both Maine and NH, her specialty is working with small businesses, individuals, and families with their health and life insurance needs. She is certified to offer health plans both on and off the exchange and is contracted with every health insurance company that offers plans in both New Hampshire and Maine. Her other passion is assisting Medicare beneficiaries with their Medicare Supplemental, Medicare Part D Prescription Drug Plans, and Medicare Advantage plans. Terri has seen firsthand the importance of insurance products and how they help families. Her goal with Balanced Care is to “Insure Security and Peace of Mind One Family at a Time”.