How Much Life Insurance Do You Really Need?Submitted by FSB Premier Wealth Management on September 22nd, 2014
In continuing with Life Insurance Awareness Month, I have a question for you – are you confident that you have the right amount of life insurance to protect your family? Traditional school of thought suggests most people should have 8-10 times their annual salary in life insurance coverage. This is a good place to start, but what if your situation is not like that of most people? This week, I am sharing a simple formula to help determine what may be the appropriate amount of life insurance for you:
1. What do you want life insurance to accomplish?
a. Final Expenses ($10,000-$15,000)
b. Income Replacement (5-10x annual salary)
c. Pay off mortgage
d. Pay off other debt (car loans, credit card, etc.)
e. Education fund ($25k/student/year estimate)
f. Other (daycare, charity, etc.)
Add items a-f: __________
2. How much life insurance do you currently own?
3. How much life insurance do you have through work?
4. What amount of liquid assets do you have?
Life insurance needed to meet current needs (Subtract Items 2-4 from Item 1)
Keep in mind that the amount of life insurance you may need will most likely change over your life. Some life events that may warrant a review of your coverage include: getting married, buying a house, and having a baby, just to name a few. As you approach these milestones, contact one of the advisors at FSB Premier Wealth Management to help ensure you are adequately covered.
Jordan Alborn, CFP®
VP/Financial Advisor - FSB Premier Wealth Management, Inc.
This material is provided for general information and educational purposes based upon publicly available information from sources believed to be reliable. Any opinions expressed are my own, which are derived from my experience and background as a financial advisor. They do not represent those of my employer, FSB Premier Wealth Management, Inc., or any of its affiliates including Farmers State Bank.