At a certain point in your life you realize you might need life insurance, but how much is the right amount for you? Continuing on with our theme for Life Insurance Awareness Month, let’s take a look at this very common question you’ve probably asked yourself.
So, how much do I really need? Well, depending on who you ask will depend on your answer. You could call a life insurance agent, financial planner, wealth advisor, etc. and get a different answer from each of them. Are they all right or are they all wrong?
While I hate to say this, it really depends because there are a number of different methods in determining how much life insurance you actually need. And, it’s not a static amount. In five years from now, it could be a totally different number (greater or less).
There are quite a few different types of software and methods to calculating how much life insurance you need. None of them are right or wrong, just different. Some are very simple, while others will want to know all sorts of information.
My recommendation would be to sit down with a Certified Financial Planner® who will assess your current situation and needs and move forward from there. The reason I suggest a CFP® is because they are a fiduciary and, most importantly, must recommend what’s in your best interest (not theirs).
You want somebody you can trust and who will be completely up front and transparent. Someone you feel comfortable with that can explain why this amount of life insurance is right for you at this time in your life.
You don’t want to leave the meeting thinking you just got sold or wondering whether you just did the right thing. You need to feel confident in your decision to purchase the amount and type of life insurance that is right for you.
If you’re not keen on meeting with a Certified Financial Planner® and want to go down the DIY route, then I would recommend checking out a number of websites that do a pretty good job at looking at it objectively.
A few life insurance calculators to check out include Bankrate, LifeHappens, or CalcXML. All are very good with each being completely unbiased and going into various amounts of detail. It will be up to you to determine which one works best for your situation.
Once you’ve determined the correct amount of life insurance you need, it’s now a matter of determining the type of life insurance that’s best for you. There are a number of different choices out there, so it’s important to make the right decision.
With that being said, stay tuned for next week’s blog post as we look into the various types of life insurance so you’ll have a better idea when you’re going through the process. When it comes to purchasing life insurance, not only do you want to make sure you have the correct amount, but you also need to ensure you’re purchasing the correct type at a competitive cost.