Understanding The Value of Life Insurance
Don't look at life insurance premiums as a financial nuisance. Life insurance can help you to provide financial security for your loved ones as well as assist you in achieving your financial goals. That's why life insurance is an essential component of most financial plans, reports the Colorado Society of CPAs. The proceeds of a life insurance policy can help your family meet ongoing expenses, fund major financial obligations, such as a college education, and maintain your current life style. The Society provides the following basic information to help you determine your life insurance needs.
WHO NEEDS LIFE INSURANCE?
If there are individuals who depend on you for financial support, you need life insurance. Life insurance provides income protection for your family in the event of your untimely death.
HOW MUCH INSURANCE DO YOU NEED?
The amount of insurance you need varies over your life span. To arrive at an approximate amount, begin by calculating your normal monthly living expenses, such as utility bills, food, clothing, transportation, child care, and other costs. Multiply this amount by 12 to arrive at an annual figure, and then by the number of years you want to provide this income. Next, you need to add in the cost of any short-term needs such as final medical, funeral and burial expenses; estate taxes; major debts, such as your mortgage; and future expenses including the cost of your child's college education. Once you have