Right Amount of Life Insurance
| Have Enough Life Insurance? |
Many individuals think they have enough life insurance coverage because they are covered through a group plan at their place of employment. But the reality is that many Americans are significantly underinsured. What's the right amount for you? Read on to learn more.
| Step One: Determine the Type of Life Insurance You Need |
There are two basic types of life insurance: term life insurance, which provides life insurance coverage for a specified period of time (the term), and whole life (permanent) life insurance, which combines a death benefit with cash value. Cash value insurance offers lifetime protection, while term insurance can protect a specific debt obligation, like mortgage or home equity loan that will expire at the end of the term. Most term policies can also be converted to a whole life policy during the term of the policy without additional medical underwriting.
| Step Two: Discuss the Options with a Licensed Representative |
He or she can guide your choices, which can include the type of insurance, the term needed, whether your spouse should also have coverage, etc.
| Step Three: Determine the Right Amount of Insurance Based on Your Assets |
The following "quick planner" tool simplifies the task of determining the right amount of insurance. Here is a sample:
| Assets | Amount |
|---|---|
| Savings accounts, including 401(k) and other investments that you want to protect | $___________ |
| Existing life insurance policies | $___________ |
| Subtotal of assets | $___________ |
| Liabilities | Amount |
|---|---|
| Mortgages | $___________ |
| Auto, home equity, education, and other loan obligations | $___________ |
| Children's future education expenses (conservatively: $60,000/child) | $___________ |
| Subtotal of liabilities | $___________ |
| Subtract Liabilities from Assets = Life Insurance needed | $___________ |
|---|
| Step Four: Make a Decision and Move Ahead |
The primary reason why people don't buy life insurance is procrastination. But purchasing life insurance can be completed in-person or over the phone in just 15 minutes.
The simple plan illustrated above does not take into consideration the future income loss of the deceased. But for many middle and upper middle-income families, the challenge is to buy life insurance coverage they can afford. At its core, the primary purpose of life insurance is to protect assets and cover liabilities so the remaining family members are not burdened financially as well as emotionally from the loss of a loved one. If you are healthy, term life insurance will likely be very affordable.
DCU is proud to offer low-cost and easy-to-buy VantisLife Insurance, a company that has been helping financial institutions offer life insurance products to their members and customers for more than 65 years.
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DCU Financial
220 Donald Lynch Boulevard, Marlborough, MA 01752 • 800.328.8797, ext. 6077 • Email: financial@dcu.org
© 2011 DCU Financial
220 Donald Lynch Boulevard, Marlborough, MA 01752 • 800.328.8797, ext. 6077 • Email: financial@dcu.org
© 2011 DCU Financial