How To Save

While many people understand the importance of life insurance, it often can become an after thought as many people's budgets get squeezed. Find out tips that can help you save when purchasing your life insurance policy.

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Know Your Life Insurance Needs

The question of, “How much life insurance coverage is enough?” is not always clear and is certainly not a set formula for all.

A rule of thumb among financial planners is that you should have enough insurance to replace five to seven years of your salary. They also advise that certain circumstances, such as having young children or carrying significant debt may make it necessary to raise your coverage amount to replace as much as 10 years of income. For example, a person making $60,000 a year should have a minimum of $300,000 to $600,000 worth of coverage.

By understanding the purpose of life insurance-- replacing your income in case of your untimely death--- to help your dependents maintain their current lifestyle, you will be able to better calculate your life insurance needs.

Consider whether your surviving partner or spouse will have to take on child care expenses. Do you have other assets on which he/she can draw? Will your children need college tuition or are they already on their own? These, and many other factors, will influence you when deciding how much life insurance coverage you need.

Make a list of questions, take your time to be sure all of your needs will be covered, and don’t make the mistake of not buying enough coverage. Being under-insured defeats the purpose of buying life insurance in the first place: cover your dependents future needs.

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