How do you determine how much life insurance coverage you need? Good morning everyone and welcome to another Finance Friday. September is National Insurance Month so we’ll spend time discussing different types of coverage that can help you with your financial plan. Let me begin by saying that I believe insurance can be a very useful tool for financial planning. However, one should be careful in thinking that it’s the only solution. Insurance works best when it can be combined with other strategies to help reach financial goals. This week we’ll begin with Life Insurance.
You hear the ads on TV and the radio: “I can get $1M coverage for only $20 a month!” While that sounds too good to be true, you have to ask yourself if that’s how much coverage you really need. There are 2 different things to consider:
Legal Obligations – This is mainly about debt (Mortgage, student loans, car loans etc.). In a perfect world, you would want your beneficiary to not have to worry about any of your debt outstanding.
Moral Obligations – This is mainly aboutyour legacy that you plan on leaving for your heirs and loved ones. Think about what you want your beneficiary to do with this money. Is it to pay for higher education for your children? Is it to pass down to heirs so they may purchase real estate when they are older? Will it be to leave a large donation to a charity of your choice?
There are other calculations that insurance agents conduct to determine how much coverage a person needs. I find that these two are a good place to start to get an idea of how much you would be looking for. Going into an insurance conversation with these goals in mind can help make the process easier. Please contact me if you have further questions and thoughts on this discussion to hector@hrcfin.com. Also, don’t forget to follow HRC Financial on Facebook and LinkedIn for more Finance Friday Tips and Insights. Thank you again for your time this morning and have a relaxing Labor Day weekend! Football is back!