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What Size Life Insurance Plan Do I Need?

Posted September 07, 2021 in Life Insurance

2 Minute Read: 

Picking a life insurance plan can be stressful and confusing, and you may be wondering what size plan is right for you and your family. 

Depending on your family’s lifestyle and other factors, some people need a larger policy than others. 

So, how much do you need?

The answer to this question is straightforward: as much as is needed to cover your obligations when you pass on. At the minimum, your policy should effectively cover all your final bills, say hospital or nursing home bills, and funeral expenses. 

But, other needs also influence the size of your coverage.

Blocks spelling out "life insurance"

When purchasing life insurance, considering all your expenses helps determine the ideal size of your life insurance policy. We suggest making a list of items you would want the payout to cover, and our representatives will be able to help you settle on a policy. Contact Gallant Risk & Insurance Services, Inc., in Corona, California, by calling 951-368-0700 or filling out our online contact form.

Which Factors Should I Consider When Determining the Size of My Policy?

First, you want to ensure that the policy sufficiently covers the monetary needs of your dependents. Ideally, it should provide them something to live on for the immediate future. This may include funds to secure your spouse’s ability to retire at retirement age or pay your children’s school tuition. 

Next, consider your mortgage. Add up your future payments and include this figure in your designated expenses. You will no doubt want your family to stay in your home, and this consideration will help them do that. 

Other kinds of debts you may have besides your mortgage are also essential considerations. If you plan to use your life insurance to pay off your debts, such as credit cards, student loans or personal loans, you need to make provision for that to get passed down to your family.

What Is the Minimum Amount You Can Pay in Life Insurance?

As mentioned above, the amount of money your policy pays out, called the face value, depends on individual factors. The policy you sign up for will be different from that of another person. But, financial experts recommend that you buy a policy that is 10 to 15 times your yearly income in coverage.

Can I Consider My Life Insurance as Part of My Investments?

Yes, you can think of your life insurance as a part of your investment if the policy adds cash value. Your insurance policy then becomes another way of investing and saving money for your family’s future.

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