Dallas Morning News: Do you have enough life insurance?
In an article today in The Dallas Morning News on keeping your money resolutions, one of the points was to check if you’ve covered your insurance needs. The article mentions both life insurance and disability insurance.
The question asked was: Do you have enough life insurance? But no formula was given. You can check the lifeinsure.com site and read up on some of the simple methods used to calculate how much you should have.
Here’s a simple formula: 1. How much money would your family need to live per year? 2. What interest rate could your spouse earn safely? 3. Divide the annual amount needed by the interest rate. 4. Then take off liquid assets in savings accounts and stocks and bonds.
Here’s an example: Family needs $80,000 per year. You think your spouse can earn 5%. Divide 80,000 by 5% (.05) = $1,600,000. Then take off savings at say $300,000 = you should get $1,300,000 of life insurance. To double check or prove the numbers take the $1.6 million X the interest rate (5% or .05) and you’ll get $80,000.
Hope this helps. Call us at lifeinsure.com 866 691 0100 if you need any help with this or any life insurance question.
