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How much life insurance does one need?
If you are thinking about subscribing to a life insurance policy, you might want to know how much life insurance you actually need. Subscribing to a policy that is beyond your needs would be an inefficient way to handle your finances. Below, you’ll find things to take into account so that you will know how much life insurance you need and how much you should be paying on a monthly basis.
Number of dependents
Your life insurance needs should be calculated based on the number of dependents that you have living with you. For instance, if you have children, your children would be considered your dependents. They rely on you for your income and without those finances, they would struggle immensely. Additionally, a spouse or significant other can be considered a dependent as well. These are individuals in your family that are supported by your income and would need financial assistance if something were to happen to you. Life insurance can be calculated based on how many dependents that you have. For instance, if you have more than one child, you are going to need a much larger life insurance policy than someone with just one child.
Severity of their dependence
Similar to how the number of dependents that you have can affect how much life insurance you need, the severity of their dependence on your income is equally important. For instance, if you are the only person in your family that works and your spouse is a stay-at-home parent, then your entire family would be dependent on your income. This would be a very severe dependence and it would increase the need to purchase a substantial life insurance policy. The more your family relies on you for the income that you have then the greater the need to increase your policy.
Although your age is not typically a factor that will affect your need for life insurance, it is something to take into account. Life insurance policies are recommended for anyone with a family or dependents and it’s not something that is age dependent. However, as you approach your old age, the risk of health concerns becomes far greater. Old age comes with a weaker immune system and deteriorating health, which could be a concern if you have a family that is dependent on your income. The older you are, the greater your need for a life insurance policy in order to secure the financial stability of your family.
If you have pre-existing health conditions, your life insurance premiums are going to be substantially higher than if you did not. However, it’s never too late to subscribe to a life insurance policy and if you are developing health problems, it’s important to speak to a financial advisor about your options.
There are lots of factors that can affect your need for life insurance. If you have a family that is dependent on your income and if you are concerned about their financial stability, life insurance is a reliable option.