Life Insurance Policy Needs for Parents
How much of a life insurance policy needs for parent? What is the minimum amount your survivors would need it for monetary loss to you or your spouse? It considers a student a child from birth to university can cost anywhere in the neighborhood of $700,000!
Here are some quick and simple ways to get an idea of how much your life insurance policy should be:
Option 1 – Determining Expenses (-) Assets
Figure a rough estimate of your annual family budget. This would include your mortgage, child care, insurance, and basic living expenses. Don’t forget to include costs such as future education and provides holiday and as the private school and university.
Next, estimate a figure for your assets such as savings, social security benefits, or any other income that will be there such as the income of a surviving spouse. Remember, stay at home spouses contribute a lot to the family income by by-passing child care, travel, cleaning, cooking, tutoring and associated costs, therefore would need to be insured also.
Option 2 – Salary Estimate
Another quick, but more general way, would be to take your current annual salary and multiply that by 7. For example, if you make 60,000/per year then I would recommend buying a minimum of $420,000 ($60,000 X 7= $420,000). If your estimate is high, good, it’s probably right.
If you are your concern in the cost of better quality, I would recommend choosing the term life insurance. You can get a policy for the time you would need it (the number of hours your children depend on you) for a lower premium than other insurance options.
Filed Under: Insurance
