Almost everyone knows that having the correct amount of life insurance in Amarillo, TX is important. However, figuring out the right amount can be kind of tricky. What sounds like a lot of money at first may not be enough when everything is considered. Here are several things that you should consider when purchasing life insurance from Nest Insurance Agency.
Basic Formula
Most financial advisors tell people that they should have 10 to 15 times their annual income in life insurance. So, a person who makes $75,0000 may want between $750,000 and a million dollars in life insurance to help care for their family.
Family Considerations
If your spouse is a stay at home parent or you are a single caregiver for a small child, you may want a little extra life insurance. Not only will your children have living expenses until they are grown, but you’ll also want to provide for future expenses like college or weddings. According to the United States government, it costs about $13,000 per year to raise a child in the middle class. Along with child care expenses, you’ll want to add in the portion of the money that your spouse will need to fill in the gap that your earnings won’t provide.
Debt
If you owe a significant amount of money, you won’t want your survivors to suffer. You will want to leave enough life insurance money to make sure that they can pay off the money that is owed to debtors.
End of Life Expenses
If you were to pass away, your family will need to pay for your burial or cremation and any medical bills that were incurred at the end of your life. Even a simple burial can be over $10,000 and cremations are often about half of that cost.
Assets
Do you have savings or investments that can be tapped to help care for your family? Do you own real estate property with no debt or a business that can be sold? Whatever you have that has value can be subtracted from the total that your family will need to take care of themselves.
Sum It All Up
Now it’s time to do a little math. Figure out how many years each of your kids will be dependents and multiply that by $13,000. Add in the amount you’ll want to provide to pay for their college. Figure out how much money your spouse will need support until retirement. Add in your end of life expenses and the amount of debt you have to pay off. Subtract any assets that can be realized. Doing all this math will give you a ballpark figure of an appropriate life insurance amount.
If determining how much life insurance you need seems too complicated, contact Nest Insurance Agency. They can help you decide the appropriate amount of life insurance you need if you live in Amarillo, TX or the surrounding area.
