How to assess life insurance needs


Most Americans take life insurance lightly. They either do not buy insurance on time or else have inadequate coverage. You should not make the same mistake. Instead you should learn how to assess your life insurance needs.

By doing so, you will do yourself and your family a great favor. You will ensure that your family does not suffer in case something happens to you. A survey by MetLife shows that only 46% of widows and widowers felt that the insurance amount was adequate. But then it was too late. Their spouses were no more to compensate them for their poor planning.

In fact, research shows that more than 58 per cent of Americans who have a full time job and financial dependents insure themselves for less than thrice their annual household income. This is insufficient considering the expenditure and needs of an average American.

Most companies offer life insurance benefits to their employees. However, several employees keep their contribution minimum year after year. This is most unfortunate. These employees may be saving a few dollars today but they don’t realize how much damage they are causing to their family.

It is important to reassess your life insurance needs periodically. All employees must realize that the additional cost is too little when compared to the benefits that follow in case of an early death. If your company extends life insurance coverage to the spouses then you must make sure that you avail this benefit.

You need to ask several questions when assessing your life insurance needs. These include:

-- How many dependents need support in case of your early death? You should include your spouse, children and any extended family members like in laws who depend on you in this list.

-- What is the amount of outstanding mortgage payments and other debts? The insurance amount should be sufficient to cover these debts and still leave a handsome sum behind.

-- Have your children finished college education? If not, then you must make a provision for their education.

-- What are the current expenses of your family? Use this as a base to decide what your family will need in future. Your aim should be to make sure that their lifestyle does not go down after you.

You can contact professional advisors in case you have difficulty fixing the minimum life insurance sum. They can guide you on the size of your policy. But you must make sure that you buy the right policy on time, and review your insurance needs periodically.


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