You may think about loved ones, and hope to protect them by providing
for them. Or perhaps your way of protecting them is by making sure
they won't have to provide for you down the road.
Because life insurance protection needs vary so much, the right
solution is also based on a variety of factors. Are you married?
Do you have children? What about children or family members with
You may already realize that insurance - term life insurance
is important when it comes to protecting your spouse, your children,
or other people who depend on you. You might also know of some of
the other living advantages that whole (permanent) life insurance
can offer, such as cash value that you can use for things like college
education and retirement. But have you ever stopped to think about
what is indeed the most appropriate amount of coverage you ought
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What Is The Right Amount For Me?
There are two schools of thought in determining an appropriate
insurance amount. The first one considers what you represent
to your family as an economic unit - that is, your Human Life Value.
Your Human Life Value encompasses the financial contributions that
you will make to your family throughout your lifetime. In fact,
these contributions determine your family's current and future standard
of living. Therefore, if you die, your family would lose that value
and potentially jeopardize their future lifestyle without proper
life insurance protection. A very simple way to determine your human
life value would be to calculate the present value of all the income
you will earn for the remainder of your life. By purchasing this
amount in a insurance policy, you would ensure that your
family would be in the same financial circumstance as if you were
still alive and earning an income.
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A second way to determine an appropriate life insurance
amount for you is to consider only specific needs. Since all of
our needs are different, some of these might include the need to
pay off a mortgage, or the need to provide a college fund for young
children. This type of planning forces us to ask ourselves things
like how much income we would like to provide for our families,
how much debt should we pay off, and what other sources of income
will be available to help the survivors meet their day to day needs.
With this approach, we must also consider that our needs will change