A Life Insurance Formula and Templates You Can Use

There are many formulas to figure out how much insurance you need, but none supplies a definitive answer to all your needs. Here is a formula you can use.

You can buy insurance equal to 10 times your annual salary, before taxes. So if you make $30,000 a year, you should buy $300,000 of life insurance to replace your income for 10 years. Use templates to help speed up the process.

If both spouses work, then both should have life insurance to replace their own income. Do not buy insurance for your children. A 3 or 4-year-old doesn’t earn a salary so there is no need to replace income.

Getting back to basics with Term Life Insurance

The insurance industry has made insurance products very complex over the years and this has made it difficult for consumers to understand and this confusion can lead to purchases that are not necessary and costly.

Forget all the fancy names such as vanishing premium variable universal life insurance. The best way to buy insurance is to get back to basics with term life insurance. Term Life Insurance is the type of insurance that provides a payment only if you die. It’s like car insurance in that you buy it a year to year and if you stop paying, the coverage stops.

Term life is very affordable and can be outlined and refined using a sample template. A thirty-year-old nonsmoking woman could get $250,000 worth of term life for about $220 a year which comes to a little more than $18 per month. That same $250,000 benefit on a whole life or universal policy would cost $1,800 to $2,700 per year.

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