If you are in the market for life insurance you should first undertake a Needs Analysis.
Depending on the income and asset levels of the client the first questions that need to be asked are:
“What is my motivation for procuring life insurance?
If you are subject to the estate tax the answer to that question is much different that a new parent making $40,000 per year.
For this particular piece lets assume that the Insured is purchasing life insurance for needs other than Estate Planning or any other more complex tax purposes. Estate Tax needs will be covered in a subsequent post.
Needs:
1. Income replacement – many experts recommend at least 10 years of income replacement for the primary income earner in the home.
2. Mortgage payoff – How much to either pay off your mortgage or allow the surviving spouse to purchase a home with cash if you rent.
3. College for the surviving children. If you want to send your children to college take a look at tuition for the type of institution that you are wanting to send your kids. Add for inflation. If you want to send them to a state school that will be a much lower number than if you want to send them to an Ivy League type of College.
4. Other remaining bills, liens and or encumbrances, this can be significant. If you have cars, boats etc you want to make sure that whatever you wish for your spouse to retain you have adequate coverage for.
Feel free to give us a call at 866-618-1626 if you need further assistance, or if you like request a quote at the button below.
