If you’re going to invest in term life insurance, it’s very important that you purchase a policy in the amount that will cover the expenses you intend to have covered if you were to become deceased. It’s important to remember that in addition to the expenses you want covered, you will want the policy to be an amount that additionally covers at least 10 years of your annual income; this will allow your family to live according to the lifestyle they are accustom to while finding different financial avenues to support the lifestyle longer than 10 years.
Here’s a clear example of how to calculate the amount of coverage you need to purchase through a term life insurance plan.
– 4-year college tuition for two children: $75,000
– Wedding for daughter: $10,000
– First-mortgage down payment for two children: $50,000
– Annual income x 10: $800,000
If the above example applied to you, this means you would need to purchase term life insurance in the amount of at least $935,000. And although this amount may seem expensive, if you purchase a policy while you are young and in good health, you’re likely to find a premium amount that fits very nicely within your budget.
As you age, certain expenses that you wanted to have covered will already be paid for. Take for example that after turning 55 your son’s college tuition has already been paid for as well as your daughter’s wedding. You could then reduce your policy amount by $85,000, thus causing the monthly premiums to become even more affordable.
If you have questions about buying term life insurance, the best step you can take is contact a reputable insurance agent in your community. This person can answer any of your questions as well as help you find a policy that best meets your needs.