A lot of couples purchase life insurance when they first get married and/or have children. But what if you are a couple with no intention of having kids? How do you determine how much benefit to purchase? How long do you need the coverage?
The purpose of life insurance is to pay a beneficiary a death benefit to offset an economic loss. To determine how much benefit you would need, determine how much of your income needs to be replaced if you are gone.
- Do you have a mortgage? If so, would you want that paid off?
- Is the surviving spouse able to be self sufficient on their own income? If not, what is the deficit?
- As a rule of thumb, each $1mil of life insurance produces approximately $4000/month benefit to the survivor.
Determine how much monthly income would need to be replaced to calculate the amount of life insurance needed.
Once you have determined how much benefit is needed, the second part is to determine how long you would need the coverage in force. For couples with children, this is typically when your youngest child is out of the house (approximately age 25). For couples without kids, the amount of time you need the insurance is the projected time/date that you are able to retire and be financially independent. This may coincide with when you are debt free and when you are able to rely on your own assets to draw upon for living expenses.
For more information about life insurance or to request a quote, contact Set for Life Insurance today!