Life insurance needs

Purchasing life insurance is a selfless act, because you, the buyer, will never receive any financial benefit if there is a claim.  There is a maximum of one claim, and unlike auto insurance, there aren’t any “fender benders”.  The loss of a husband or wife, mother or father, or breadwinner is devastating enough by itself.  It can be catastrophic if the survivors were dependent on the deceased persons income to live.  Purchasing the right amount of Ohio life insurance can’t bring a loved one back, but it can allow his or  survivors to carry on with much less financial disruption.

Many people know they need life insurance, but don’t know how much to buy.  Determining your life insurance needs isn’t an exact science and some financial planners use a multiple of your annual earnings, such as seven times.   So, if you make $30,000 per year, you should buy roughly $210,000.  Ohio term life insurance premiums  are surprisingly inexpensive, and the younger and healthier you are, the less expensive.  While the multiple of earnings formula is simple and easy to calculate, other factors come into play.  For instance, when you have young children, your life insurance needs are usually greater than when they aren’t dependent on you.  We think you should strongly consider the following when determining how much life insurance to buy.

1) Survivor’s Income – what “lump sum” of money, invested at a reasonable rate of return will your spouse need to maintain a standard of living for the family that they are used to?   A quick rule of thumb is to multiply your annual income by 5 to 10 years.

2) Immediate Expenses – include funeral expenses and the total or partial payoff of installment or school loans, credit cards and other oustanding debts.

3) Mortgage – If you’re a homeowner, you’ll surely want your family to keep their home.  Include the mortgage balance of any first or second mortgage.

4) Education fund – if you plan to pay all or part of your childs college costs.  In state tuition, room and board, etc. at Ohio colleges are about $25,000 annually.

Circumstances in life change, and it’s important to review your life insurance needs when you get married, buy a house, or have children.