INDUSTRY INSIGHT
LIFE INSURANCE
SPONSORED CONTENT
HOW MUCH
LIFE
INSURANCE
DO YOU NEED AND
WHAT TYPE?
I
ndustry experts recommend having life insurance coverage of 5 to
10 times your salary. To many of us, that sounds like a lot of money!
But after taking a closer look you may realize that it can actually be
a pretty conservative estimate.
SOME OF THE CONSIDERATIONS
1. Replacing salary in the home.
One of the most basic approaches to determining life insurance
is to figure out how much you need to last a certain number of
years when your salary won’t be coming in. This involves calculating
a person’s “time to retirement” and how much money he/she is
projected to earn in the next 5, 10, 15, 20 or more years. Another
way is to estimate the household yearly expenses and multiply
that by the number of years you’ll need coverage. This is a fairly
straightforward way of doing life insurance calculation.
2. Living on interest.
There’s another interesting idea that a lot of experts have put
out there: the idea that with a large enough death benefit (what
the policy pays out), a family would be able to live on the interest
of the death benefit for a long time. For example, a death benefit
of $1 million would generate $50,000 per year from a 5% interest
rate. Evaluate the current stock market, trust fund and investment
fund opportunities to see if there is an investment opportunity
that would give something close to 5%. After adjusting for market
circumstances, you can figure out how your household might
achieve capital gains on the proceeds of a life insurance policy that’s
roughly even with the projected salary.
3. Age of dependents.
The age of your children/dependents should factor into your
coverage. For example, if your dependents are 15 and 17 years old,
you may only want a few years of coverage. On the other hand, those
with younger children will want policies that provide for a much
longer time.
As you can see, when it comes to life insurance, there’s a lot to
consider. If you’re going to do it, then do it right and get the amount
you need. After all, that’s just what this is—insurance and assurance
that your loved ones are properly cared for. The Anthony Passarelli
Insurance Agency wants to help you. Please call us at 412.385.4091
or stop by at 1312 William Flynn Hwy. in Glenshaw where we’ll assist
you in making the decisions that are best for you and your family.
This Industry Insight was written by Anthony Passarelli,
owner of the Anthony Passarelli Insurance Agency.
It is Anthony’s mission to help customers like you find
the best coverage for your unique needs. He has worked
to personalize and simplify the insurance process to give
you all the knowledge you need to make your decision.
Anthony Passarelli has the knowledge and experience to
help you better understand your coverage options—auto,
home, life, renters, business insurance and more.
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