Most people understand the importance of health insurance for their families, but when is the last time you considered life insurance? Life insurance is an idea that sounds good but often isn’t very high on the priority list. After all, no one likes to think about ever actually having to use life insurance. But when it comes to ensuring your family’s well-being, it’s definitely worth closer examination.
Primarily, a life insurance plan helps replace the income that your family would be missing in the event of your death. According to LIMRA (an industry research firm), 22% of families with dependent children admit they will have immediate trouble meeting everyday living expenses if a primary wage earner dies. Another 26% will only be able to cover expenses for a few months if faced with this situation. In addition, 28% of wives and 15% of husbands have no life insurance at all. Are you included in any of those percentages?
Maybe you have some life insurance, but you’re not sure how far it would stretch if your family ever needed it. How do you know how much life insurance you need? It all depends on your family’s financial situation. Does your family depend primarily on your income? What is your current debt amount? How much savings do you have? You might also want to anticipate future factors like funeral costs and college tuition.
Once you have some specific figures in mind, you can apply a quick formula to get a more accurate estimate of your family’s life insurance needs. Simply multiply your current gross salary amount (before taxes) by 4.5, which is the average number of years it takes a family to recover following the death of the primary wage earner. Then take that number and add it to your current amount of debt. This total will give you a great place to start in determining how much life insurance you need.
Need some extra help? Try this calculator that allows you to enter some of the above-mentioned figures. Then you can view a report that breaks down your family’s projected financial needs in the coming years.
Life insurance doesn’t have to be complex and confusing. GuideStone has term life plans available for employees, their spouses and dependent children. Monthly rates vary depending on age and how much coverage you want. Let GuideStone help you plan ahead to help protect your family’s finances and ensure their peace of mind.
GuideStone Financial Resources of the Southern Baptist Convention welcomes the opportunity to share this general information. However, this article is not intended to be relied upon as medical advice, diagnosis or treatment.