How Do I Know If I Have Enough Life Insurance?

How do I know if I have enough life insurance?

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A common question we receive from our clients is, “How do I know if I have enough life insurance?” It’s a big question, but luckily, there are fast and easy ways of quantifying your life insurance needs so you can keep your beneficiary or beneficiaries afloat after you’re gone.

Perform a Life and Financial ‘Needs Analysis’

It’s important to ask yourself, “What do I want my life insurance to do for me?” In answering this question, you’ll perform what is known in the industry as a ‘needs analysis’ report. If you don’t know where to start, here are some additional questions to ask yourself:

  • Is paying off my house a priority?
  • Do I have debts that I need to settle?
  • Do I want to leave my children money for college?
  • How am I hoping to provide for my spouse in the event of my death?
  • Do I want to leave some money behind for my children or grandchildren?

Upon asking yourself these questions, you’ll better be able to determine whether you have the right amount of life insurance. Rent or mortgage payments, standing debt, college, spousal support, and child/grandchild inheritances can all be tied to figures and carefully worked into your insurance coverage.

Review Your Policy with a Licensed Agent

Unfortunately, there are a lot of people out there who are looking to buy life insurance but don’t know how to navigate their options on their own, or already have life insurance and don’t understand the policy they’re bound to. For the people that have a plan already– either through their employer or other means– too many assume that their coverage will be enough because their death benefit is more than their annual income, and thus is a sufficient replacement. If you’re one of them, you may be setting up your beneficiary or beneficiaries for a tough time in the event of your passing.

The only way to truly know if you have enough life insurance is to meet with a specialist– in this case, a life and financial insurance agent. Once you determine everything you’d like your insurance to cover for you and your loved ones, bring those determinations to a licensed insurance agent, and they’ll be able to crunch the numbers and give you their expert opinion on what coverage will best meet your needs.

If you don’t have an agent yet, it’s smart to be proactive and develop a longstanding relationship with one that you trust. The earlier in life, the better, because they can advise you as time goes on and your needs change. Humans are so dynamic. We’re changing all the time, and the biggest changes often happen suddenly. Even if you’re well-established and happy with your life insurance, it’s important to meet with someone every 3-5 years and have a life insurance review done to verify you aren’t missing out on resources that could better protect what matters to you. Even if YOUR needs don’t change, the insurance industry is constantly evolving, so new products or policies may emerge that could break your current plan.

Life Insurance Questions?

Getting the advice of a life insurance agent is a complimentary service provided to the public by insurance companies and brokerages. If you’d like to speak to a specialist about your situation, call Empower Brokerage at (888) 539-1633 and one of our Life and Annuity experts will be honored to assist.

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This article was updated on 3/29/24.

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