Purchasing life insurance can be one of the greatest things you can do to help ensure your loved ones are taken care of when you pass away. But deciding how much you need is often difficult. Here are six items you might consider when looking into life insurance.
Life insurance offers clear benefits, but how much coverage do you need?
People from all walks of life deal with this question. There's no one-size-fits-all answer. You have to look at your expenses and figure out the policy amount that works for you. Here are six items you might think about:
Credit card debt
The average American household has almost $7,000 in credit card debt or unpaid amounts that roll over from month to month.If you’re among the many Americans dealing with this debt, it should be factored in to decisions about your life insurance needs.
You don't want to leave your family to deal with your credit card debt, which may be difficult to pay back, depending on the fine print.
Home ownership is a point of pride for most people — and for good reason. But maintaining a mortgage can be tricky. The typical U.S. homeowner pays on average nearly $189,000 for their mortgage, and those installments don’t stop until paid off. This means you could very well end up passing your home loan on to your family members. You can avoid this by covering it in your policy, so long as you’ve purchased the right life insurance coverage amount. Calculating the necessary sum should be simple, as long as you don't refinance or make other major changes to your mortgage.
Covering these expenses in your life insurance plan may mean your family isn't stuck paying off your school debt.
Leaving your loved ones to cover these and other funeral fees is not ideal. As you think about your life insurance options, include funeral expenses in your policy amount so that your relatives can give you the service you deserve without taking on extra costs or debt.
College or trade school tuition
Do you have kids or dependents who want to attend college someday? Or maybe they intend to go the trade school route?
You probably know that higher education costs are at an all-time high. Undergraduate students attending public, four-year colleges now pay more than $16,000 per year in tuition and fees, on average. That number more than doubles for students taking classes at private schools.You should try to do all you can to save your children from student debt. Your life insurance plan may be able to help cover their education costs.
As you figure out how much life insurance you might need, take these items into account and consider working them into your policy. Your loved ones will thank you for it.
How to learn more about life insurance
Life insurance may seem complicated, but it’s not that hard once you know the basics. Of course, we are happy to help. You can also use the TruStage Life Insurance Calculator to compare different types of insurance and learn more about your options.
What are the different types of life insurance?
It may seem simple but understanding insurance types can also be confusing. We’ve broken down a few of the most common types of life insurance policies to simplify things.
What should I look for in a reputable insurance company?
Cost isn’t everything in choosing the best life insurance policy. There’s also a lot to be said about choosing an insurance company you can really trust.
How much life insurance do you need?
This article walks you through several popular methods for estimating how much life insurance you need to ensure your family’s future.
Life insurance when you're young
It’s tempting to put off buying life insurance when you’re young, especially if you’re just starting out and money is tight. But there are two good reasons to buy life insurance now instead of waiting.