Insurance needs

[Salty]

How much life insurance should a person have?

 

[JMSR]

I voted 5x. I believe thats about what I have. It seems reasonable considering todays economy, and the possiblity of my spouse not having enough income to meet every need.

 

[Alcott]

"Other answer." I am single with no dependents. Even so, in LI I have twice my annual income, + $20,000 from my bank for a charge of $6.60/month. That should go quite a ways toward taking care of things if I leave big hospital bills or other debts, and hopefully the estate + LI will be helpful to a couple of siblings raising families. But just stating a figure or a multiple of yearly income is not going to be appropriate for everybody.

 

[TomVols]

Agreed. There's no hard and fast rule. If you have a spouse working outside the home, those needs might not be as much. If you're mortgage is paid off, you won't need as much as the person whose house was just refinanced.

Consider the following when planning LI: first, what's the impact on my final expenses? Second, what about debts I'm leaving behind? Third, what about a giving legacy? Few people consider the last one. I want to leave behind money for the Kingdom, because if I leave this life early, that's money I'd not get to contribute otherwise. Fourth, what about my child(ren)'s educational needs?

Then you need to consider Term or some other insurance, with a possible trust. A good financial rep will walk you thorough what you need.

 

[SaggyWoman]

I think it depends on if you have a family and what their needs are.

 

[Johnv]

There is no hard fast rule. I voted 2x just because that would provide my family with enough money to cover my burial costs and to pay off most of the mortgage on the house.

 

[Salty]

There is no hard fast rule. I voted 2x just because that would provide my family with enough money to cover my burial costs and to pay off most of the mortgage on the house.

Why not the whole mortage?

 

[targus]

I have ten times my annual salary - two Universal policies and two Term policies - each with a different beneficiary - each for a different purpose.

It is a part of my overall financial and estate plan and in my opinion would differ according to each individual's personal situation.

 

[Johnv]

Why not the whole mortage?

The balance would be about $10,000. I'm not going to bother changing my life insurance over that.

 

[TomVols]

I have ten times my annual salary - two Universal policies and two Term policies - each with a different beneficiary - each for a different purpose.

It is a part of my overall financial and estate plan and in my opinion would differ according to each individual's personal situation.

This is precisely why folks like Dave Ramsey, et.al., annoy me. Every individual is different. So to prescribe term only as Dave does is irresponsible at best and fradulent at worst.

 

[billwald]

Whole life is very expensive for what you get. Better to get term and invest the difference.

 

[targus]

Whole life is very expensive for what you get. Better to get term and invest the difference.

It depends... like so many other things it has advantages and is useful in the right situation.

The larger more relevant point is that everyone's needs and everyone's goals are different - and for that reason everyone's insurance solution would be different.

 

[billwald]

For people with large estates an important quality of life insurance is that the proceeds are tax free. If you have 5 kids and leave each of them $100K the govt will take a big chunk. If you buy 5 insurance policies each kid will get his $100K net, not after taxes are taken out of the estate.