Beginners Guide to TikTok for Search - Rachel Pearson - We are Tilt __ Bright...
Kiplingers Life Insurance
1. How Much
“truly is an art as well as a strategy to calculate how
.
science,” says Tim Maurer, much coverage to buy and
N
O
TI
a financial planner in Hunt to form a plan that’s easy to
Life Insurance
Valley, Md., and coauthor update. The idea is to assess
of The Financial Crossroads U
whether you need extra
(Companion, $25). IB
coverage or different poli-
TR
cies only after you project
Do You Need? IS
A simple strategy. The pur- your life-insurance needs as
pose of life insurance is to D
the sum of four categories.
allow your family members R expenses. A funeral,
Use our formula to cut through the confusion. to pay the bills and live their
lives as planned despite your FO burial and related expenses
Final
By KimBerly lanKford T
absence. That’s why some
O tend to cost $10,000 to
.N
experts and most online $20,000. Your beneficiaries
unpredictable investment
and job markets are rough
no mortgage and a substan-
tial retirement fund. L Y
calculators sponsored by
the insurance industry seek
may be able to get the tax-
free proceeds from insur-
on savings and retirement Low inflation and a re- N
to figure the chunk of in- ance faster than if they
planning. They also compli- covering stock market may O
vestment capital it would waited for money from your
cate the issue of how much tempt you to low-ball your G
take to replace all of your estate. Use $15,000 as a ball-
life insurance is right for life-insurance needs. But IN
income for 20 years or lon- park number.
you and your family and
what kind you should buy.
other financial realities,
such as puny yields on rein- E AD
ger, held securely in Trea-
sury or municipal bonds Mortgages and other debts.
Standard formulas—such vested lump-sum benefits, R and certificates of deposit. Total your mortgage bal-
as buying coverage equal may require that you have
AL With savings yields low and ance, car loans, student loans
to eight to ten times your N
more coverage, not less. And the prospect of longer life and any other debts that
annual income—are inade- O
you’ll likely experience life
S
expectancies in retirement, would be a heavy burden on
ER
quate shortcuts. Online cal- events that call for changes this approach tends to aim your survivors. They may
culators are apt to tell you in your insurance: marriage, high, especially if you as- choose not to retire the mort-
to raise your coverage by P
parenthood, homeowner- sume raises and promotions. gage, especially if the inter-
$1 million even if you already R
ship, college expenses and “You can find people who est rate is low, but the money
have insurance. The truth is
FO
retirement. Instead of rely- are extremely minimalist should be available so that
PY
that life insurance is a per- ing on rules of thumb, you’re with insurance recommen- they won’t face the prospect
sonal affair. Two couples better off taking a system- dations,” says Maurer. “But of being forced to sell.
O
may earn equal salaries, but atic approach to figuring I see an overabundance of
C
it’s silly to say that someone your life-insurance needs. people who end up justify- Education expenses. This
T ED
with four young children
should have the same cover-
That’s easier than it sounds,
as you’ll see from the fol-
ing more insurance than I
think is reasonable.”
calculation can be tricky
because you need to con-
IN
age as empty nesters with lowing process, because it Instead, he offers a simple sider the cost of college
PR
You nEED MoRE liFE insuRAnCE iF You...
Tie the Knot Have a Child Buy Your Dream House Are About to Retire
Your new spouse might depend It takes a lot of money to raise When you settle into your family’s No more insurance from work. If you
on you even if he or she earns a child—and it doesn’t get any permanent home, guard against die, your spouse could lose pension
as much or more than you do. cheaper if you’re not around. its loss in case tragedy strikes. and some Social Security income.
08/2010 Kiplinger’s personal Finance