You will want to ensure that your life insurance benefits will be enough to cover all of your financial obligations once you pass away. Therefore, the best place to start is determining how much you need is to take a look at your current financial resources and expenses. Hinman & Associates Insurance of Reno, NV can also help you calculate the amount of coverage you need when purchasing your policy.
Coverage for Basic Needs
The formula for calculating basic needs is to subtract the amount of any existing assets that can be used to pay the bills once you are gone from the financial obligations that will need to be covered. The remaining amount will determine how much life insurance you may need.
The financial obligations that will need to be covered typically include:
- Income replacement
- Large debt
- College tuition for children
Existing assets that you have for your family to use to pay bills after your passing may include:
- Savings, such as retirement savings like a 401K plan
- Any life insurance policies that are already in place
- A 529 account for college savings
- Burial insurance that will cover funeral expenses
The Consequences of Insufficient Coverage
If you fail to obtain enough life insurance to meet the financial needs of your family, they could be in trouble when you die. One study found that the family could be financially impacted in one to six months following the death of the primary wage earner. If you do not secure an adequate amount of coverage, your family may not be able to pay for everyday expenses when you are gone.
At Hinman & Associates Insurance of Reno, NV, we will take the time to look at all of your current expenses and assets in order to determine how much life insurance you need to purchase. Give us a call today.