A Broader View
The answer varies for every individual, however, experts recommend a coverage 10 times your income is a viable rule of insurance.
Based upon your personal and financial circumstances, the life insurance coverage that would suit you varies from 5 to 15 times your income.
What Are Your Circumstances?
Life insurance policy is a financial safety net for yourself and your family for emergencies or unexpected hard times. After the 2008 recession, many people thought of buying life insurance policies as a means of savings as well as investment. Many life insurance policies offer a savings component while some offer a pure death benefit amount to fulfill your needs. It depends upon how you view your future needs while applying for any of these.
United Life Insurance Group has extensive policies and insurance companies on board with it. Our brokers can help you connect with a suitable insurance company and policy.
Things to Consider While Buying a Life Insurance
A life insurance policy is a substitute for your income or savings in the future. If you have lifelong dependents or dependents who would come of age after some years, you need to think differently while purchasing a policy.
Some key factors need to be considered while deciding on the policy you require. These are:
- Your current net income: The income after paying taxes and liquid assets is the cash in hand.
- Assess your financial obligations: Your current expenses and debt make your financial obligations. This includes your house rent/mortgage, utility bills, children's tuition fee, and raising expenses, monthly/annual living expenses, end-of-life expenses. These are all the financial obligations you need to consider while planning to have a life insurance policy.
- Your liabilities/debts (current + future): If you have cosigned any mortgage with your wife, have borrowed the auto loan, any debt, or a student loan with your child, you need to think of getting life insurance for unforeseen circumstances or early death scenario.
- Your Dependents (current and future): Also, calculate the cost of raising the children or supporting the elderly parents or any other dependents on you. Also, if you have a special needs child or a special needs spouse you need to make sure they are protected financially even after your death.
- End-of-life expenses: To meet your funeral and end-of-life medical bills, you probably need to plan a life insurance policy. This would save your family from being overburdened by a sudden financial obligation.
How To Calculate The Coverage You Need
Now, that you have identified the current and future resources, financial obligations, and personal dependencies, find the coverage gap between your income and financial obligations to know how much life insurance would you need.
Coverage gap = Financial obligations – (income + liquid assets)
The amount you get is the amount you would need the insurance policy to cover for you.
Life insurance may not be a good option for many
Those who cannot afford to save for the future at the cost of their present should refrain from considering a life insurance policy or
Ask our experts for the best advice
- Individuals in low- income groups
- Bachelors and young
- Members of the Group life insurance
- Financially free or self-sufficient individuals