Welcome to our Life Insurance Calculator! It’s an excellent tool for determining if your current life insurance coverage will provide for the needs of your family. For more information on life insurance, see our informative article below the calculator. Thanks!
Do You Have Enough Life Insurance?
It’s difficult to think about, but if you passed away, would your family have enough income to pay the bills?
Concerned that they won’t be covered in the event of your death? What if there was a way to make sure their needs are met – and yours should your spouse pass away?
Well, there is, and it’s called life insurance! Perhaps you already have life insurance. If so, try out our Life Insurance Calculator and see if you have adequate coverage.
Here’s what you need to know about life insurance and the calculator in a nutshell . . . .
Using the Life Insurance Calculator
It’s simple. Simply enter in all your data, and the calculator tells you exactly how much more coverage you’ll need to take care of your family in the event of a death. Both individuals in a relationship should have coverage, especially when they both are working and rely on their income.
While it might be surprising how much coverage you need, don’t panic. We’re going to show you how to save money on life insurance and get the most out of your policies.
Choosing Top-Notch Life Insurance
Not all life insurance is created equal. The kind we recommend at Truth in Financial Planning is called “term life insurance” that has a level premium throughout the term. Stay away from whole life, universal life, annual renewable term, and other variable life policies.
Life insurance is not an investment – it’s insurance. Returns on “investment” type insurance policies are dismal.
Term life insurance – the kind with consistent premium payments – is usually lower cost than variable policies, and you can use the extra money you save to pay off your debt or build your emergency fund in Phase I: The Foundation Phase or build wealth in Phase II: The Accumulating Wealth Phase.
During the second step of the first phase, you’ll get appropriate insurance policies in place. This is the time to purchase life insurance for you and your family – right after you start your budget and save up $1,000 in cash at home.
How Much Life Insurance Do You Need?
It’s important to make sure you base your life insurance needs off of what it would take to replace your income, not how much debt you have. Sure, paying off all debt is certainly nice, but it doesn’t pay for utilities, food, transportation, and so on into the future. Instead, base your life insurance coverage off of your income.
A $1,000,000 policy provides about $40,000 of lifelong income to a spouse. This is a good rule of thumb to help you determine how much life insurance you need. But be sure to use the Life Insurance Calculator to find more precise estimates.
At the retirement age of 65, you won’t need income replacement. So if you’re 40 years old, grab a 25-year level term life insurance policy. Having coverage up to retirement is a good idea.
Stacking Life Insurance Policies
A great way to save money over time is to stack life insurance policies. For example, you may have five policies, with each policy expiring every five years. Over time, you have less coverage, but keep in mind you’ll also need less coverage – thus saving you money.
You can then turn around and take the savings and invest the money or pay off more debt. Comparing this plan to whole life policies, it’s a no-brainer!
Life insurance should be a part of every couple’s insurance portfolio.
Hopefully, you’ll never need to use it. But if you do, you’ll be so glad you took the initiative to purchase it.
If you have any questions about life insurance, be sure to talk with a Certified Financial Planner who can help you navigate the complexities of insurance. Simply fill out the form below!
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