So you decided to get life insurance to protect your loved ones and wondering if $750k will take care of everything? Well, there is no simple answer and your decision should be based on few important factors. The great part is you have come to the right place we have helped thousands of families get the right amount by using our custom analysis. Let’s not waste any more time and dig in. Here is a brief summary below if you’re a cliff notes kind of person but for our bookworms feel free to read on:
- You should always start with whether your need is for a term life or a permanent life insurance plan.
- Term plans provide protection for a specific set of years and expire at the end of that term.
- Whole life is a form of permanent life insurance that provides coverage for your entire age span typically until age 100. This policy also has fixed cash value accumulation.
- Universal life is also a permanent life insurance policy that offers lifetime cover but the interest on the saving element varies based on markets.
- Index Universal life just like a universal but interest is based on indexing.
- Variable Universal life is the last type of permanent life insurance and it does provide coverage for the rest of your life with again flexibility and investment options.
- Life insurance is not a one size fits all kind of thing and that’s why we can’t tell you whether or not $750k is enough coverage for you or not.
- Ask yourself a couple of questions such as how much debt do you have other than your mortgage, and do you add to your debt every month or do you pay it down each month? Another question to ask yourself is how much do you spend each month? A good way to find out how much you spend each month is by using your bank statements. How much do you save each month?How much income does your surviving family members (spouse and children) need if you aren’t around?
- You’ll also want to calculate money for final expenses like funeral costs, hospital bills and any other expenses associated with dying.
- If you are a stay at home mom or a stay at home dad, don’t downplay your importance. Without you, things around the house wouldn’t get done and you are responsible for a lot of important things such as your children’s well being.
Term Life(10,20 or 30 year) vs. Permanent Life (Universal Life, Whole Life)
The life insurance shopping experience should always start with identifying what kind of life insurance policy you need. There are two types of life insurance people typically purchase a term life insurance and a permanent life insurance policy. Like many individuals you might have heard of a term life insurance, this is a life insurance coverage designed to cover you for certain time frame typically ranging from 10 to 30 years. At the end of the term, the rates will go up every year until age 95 at which point you should shop around or convert your term. The ideal situation for term life insurance if you’re under the age of 50 and would like to protect your family during the most vulnerable period. This period is when the children are young, you just started a mortgage and need to replace your income before retirement. The best part is that this policy is extremely affordable and depending on your age can be less than a dollar per day!
Not everybody needs a term life insurance policy since you are either a person that wants to provide lifetime coverage or are simply at a different stage in your life. If you ever heard of Universal Life, Whole Life or Variable life, these are all permanent policies. The meaning behind permanent….is as you have assumed is that it is a lifetime coverage that will provide protection until age 100 and even 121 since life expectancy is increasing. Let’s take a moment to address the differences in the permanent options. Whole life insurance policy is most known since it is the first permanent plan to come out decades ago. This policy provides guaranteed death benefit along with guaranteed interest rate accumulation for cash value typically ranging from 1% to 4%. The next option is a universal life which came as a newer option after whole life since it offers a lot more flexibility with payments and investment option. A variable policy is the riskiest permanent life insurance but allows you to have cash value investments like stocks with tax benefits of life insurance.
How much does $750,000 of life insurance cost?
Life insurance rates are fixed everywhere you go but are determined by your gender, age and overall health. Just to get to the point we are going to pick ages from 30 to 50 years with the assumption you’re in good health for a standard 30- year term life policy.
Male
Age 30 $750k 30 Year Level Term- $47.06/mo with American General
Age 40 Age 30 $750k 30 Year Level Term- $79.63/mo with Foresters Life
Age 50 Age 30 $750k 30 Year Level Term – $198.94/mo with American National
Female
Age 30 $750k 30 Year Level Term- $38.94/mo with Foresters Life
Age 40 Age 30 $750k 30 Year Level Term- $62.21/mo with American National Life
Age 50 Age 30 $750k 30 Year Level Term – $147.66/mo with Banner Life
*As you can see ladies get better rates because they live longer. You go girls!
Will it be enough for your family?
It can get pretty frustrating shopping for life insurance without knowing the right amount of coverage to get. Last, thing you want to do is pull the amount out of thin air or simply go with your lucky number.(nobody does this just thought it was funny) If you did go with $750k and died that would last your family 3 years if you make $250k per year or 15 years if you were bringing in $50k. As you can see life insurance is really a form of income protection from death. Besides income, there is also a need to figure out how much assets you have and liabilities, in simple terms things you own versus things you owe. It is also important to note that in most cases going up in coverage amount can bring you better pricing since life insurers have price bands which is where they offer the biggest discounts. The price bands are at $250k, $500k, $750k and $1 million, it is quite common for a $200k policy to cost more than $250k so check all options before you jump the gun! There is actually a very specific way to determine a perfect amount of coverage to protect your family and we have been using it for years to help our clients.
How to find out your coverage amount?
Trying to figure out how much coverage you need can seem like a daunting task but you don’t need to be a CPA to get the math right. There are few ways to do it one of which is by going by a general multiple of your income. In this case, you simply multiply your annual income by 10 to 20 times depending on your age. Although, this is better than guessing a number there are some more refined techniques. Which brings us to the best way, a needs analysis!
A needs analysis is where you or your agent calculate all the possible factors to determine the perfect amount of coverage. The needs analysis will focus on replacing your income for the duration until your children are grown and your spouse retired. It will also calculate all your assets like cars, homes, savings and retirement portfolio against all the debt accounts you have. Your children’s college education is also calculated along with any estate taxes if your estate is worth more than $5.45 million.(2016 exemption) Once all this is calculated you will have a peace of mind that your family can continue the lifestyle you have been working hard to provide. If you’d like to play with some number here is a link to our life insurance needs calculator.
From our experience, we always recommend getting enough coverage to have your family live off the interest indefinitely. Basically, if you die your death benefit will go into an investment account where it will accumulate 5 to 10 percent interest and the principal amount doesn’t have to be touched. For example, let’s say that you got a $750,000 policy and did interest assumption of 8% interest. This would provide $60,000 of income per year for your loved ones for the rest of their lives.
What about stay at home partner?
A lot of individuals miss out on the opportunity of getting life insurance on their non-working partner, which can be a huge mistake. Once you take into consideration that in the case your partner passed you’ll have some hefty fees for daycare, cleaning and in some cases cooking. So you should bear in mind that getting a policy on them is quite a priority since the function of the household must continue as well. Make sure to make the accurate calculations and get a policy on your partner!
Work with us!
Whether you decide to buy a policy with a coverage face amount of $750k, $500k, or $250k, you should still shop around for quotes. You can get this done right here on our site by using our amazing quoter to get the best rates available! We work with quite a large number of insurance carriers with a variety of different life insurance plans. If you prefer a live person we have the friendliest and knowledgeable advisors ready to help you get the best policy. The best part is our service is absolutely free to you so reach us today and get a no obligation quote to get your family protected today! Oh, and did we forget to mention we will also do a complete needs analysis to get you the perfect amount of coverage. Welcome to the best life insurance agency on the net!
