Life insurance is a very common item these days but still there are a lot of people who have number of concerns regarding life insurance. Even most of those people who are already covered under life insurance dont know for sure that how much is the total worth value of their life insurance plan. If you are making an investment in a life insurance plan then you must definitely be pondering over the how much life insurance should you buy issue. Below mentioned guidelines are going to help you reach a suitable decision.
Why do you need life insurance?
Before you get confused over the question of how, lets ponder over the theory of why you might need a life insurance plan. Here you must keep in mind that getting a life insurance plan is not necessary for everybody.
If you are a rich person i.e. if you have enough money in the bank and other assets to take care of your debts, your funeral costs and your dependents or if you dont have any sort of debts or dependents then there is no need for you to get a life insurance plan. But if you are the sole breadwinner of your family and you have dependents who would have to pass through financial difficulties after your death and you also have debts that cannot be covered by your savings then you definitely need a suitable life insurance plan.
Life insurance is the only protective measure that will not only ensure the secure future of your dependants but it will also cover your debts.
What sort of life insurance will be suitable for you?
Yep this is the very next question that will come to your mind after you have decided to invest in a life insurance plan. The type of life insurance mainly depends on your needs and priorities. If you want an insurance plan that will cover all of your debts and will protect your family from the sudden financial pressure after your death plus it also covers your funeral costs then you need to go for universal life insurance plan or whole life insurance plan. But if you only want to protect your family from the sudden financial stress after your untimely death then the idea of term insurance will be more suitable for you. You must also keep your financial power in mind before investing in any life insurance plan because term life insurance is cheaper in comparison to the whole life and universal life insurance plans.
How much life insurance should you buy?
While you are in the process of getting an answer to this question, there are few important points that you really need to consider:
- You need to make a rough estimate of your monthly expenditure.
- You need to make a complete estimate of all of your debts and the mortgage that you possess.
- You also need to register those debts that are continuously paid back by you and those debts that are not yet paid back in the separate portions.
After you have calculated all of your debts, you will get the proper estimate of the life insurance plan that you will have to buy. If you think that your current life insurance plan is not enough to cover your current debts then you should act instantly on this and apply for a new life insurance plan with enough coverage value or one that adds the value to your old one.