How much life insurance do I need?
There is no exact right answer to this question. The general rule of thumb is:
- Families with children under 10 years old – 10x earnings plus debt.
- Families with children over 10 – 5x earnings plus debt.
- Insurance carriers will normally go up to 20x earnings.
life insurance is there to provide the necessary income in the event you pass away. Its important to add up all your financial obligations when deciding on a suitable amount of coverage.
When figuring out how much is needed there is a few different factors.
- All outstanding debt such as mortgage payments, car loans, and credit card debt.
- The cost of your children’s education.
- Current salary, how many years would your family need support for?
How much for $500,000 of life insurance?
Life insurance can vary vastly in price. So its important to talk to a broker to make sure your getting the best rate possible and learn a bit more about the insurance carriers and how they operate.
the main factors when calculating premiums is:
- Medical history
- Lifestyle & Avocations
Average term life insurance rates by age
*Below are some generic monthly rates for a healthy individual in 2019 if you are not in excellent health or use tobacco products expect to pay more
*term refers to the amount of years the policy is guaranteed for
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Laddering your life insurance
We have looked at how much $500,000 costs for a single policy but another strategy that is sometimes used is the “ladder strategy”
For most people their immediate concern is right now, but still want to have some coverage in the later years.
For example, $500,000 in coverage could be done in multiple different ways. This could look something like this. Term 10 $250,000 and a term 20 at $250,000. This allows you to meet your immediate goals for the first 10 years, then after the 10 year term is up you still have the $250,000 of coverage left.
The extra $250,000 in the early years could help pay for a child’s education or a mortgage payment.
Use an independent insurance broker
Using an independent broker when looking for insurance rates can result in up to 70% in savings when finding the right policy.
Our agents have access to over 20 different companies in Canada which allow us to provide the best possible service and products on the market. If you have any health complications it also important to work with an independent broker so they can assist you in finding the best options available.