The following article is going to talk about how much life insurance you should have, how much its going to cost you, and also the process of getting coverage.
750K Life Insurance – How much should I have?
It varies with each specific situation and from person to person.
The general rule of thumb:
- For families with children under 10 years of age is – 10x the parents earnings plus family debt.
- Families with children over 10 years of age is – 5x earnings plus debt.
- Couples with no children – 2-10x earnings plus debt
*Note: the above is a general guide but insurers will go up to 20X earnings for each parent.
- Income replacement – for most people, their biggest asset is the ability to earn their income. When calculating life insurance need, it’s important to consider your annual salary and decide how many years of income your family will need to adjust to their new reality without you providing for them.
- Debt – without your financial support, it will be difficult to service the debt left behind. The life insurance amount should provide an amount to eliminate all debts. Items such as mortgage, car loans,E credit card ptayment, ect.
- Children’s education – if you are hoping your children will attend university or other post secondary education they might need some financial assistance. Life insurance can ensure they have the funds they need.
How much should life insurance cost per month?
There are a few variables that determine the price of life insurance.
- Age – As you get older, the price of life insurance goes up.
- General Health – your health status will come into play when the underwriters are calculating the price of your policy. *note: poor health can often be insured – its important to speak with a broker for more info.
- Lifestyle / Avocations – risky behaviour is a factor that underwriters consider. Driving record, risky hobbies, drug & alcohol abuse.
*Below are estimated monthly rates for $750,000 of life insurance.
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Life Insurance Application Process
- Application – most carriers offer brokers an electronic application that can be done remotely with each client. We’ll either send you a link to complete the application on your own or we’ll share our screen with you and work through it together.
- Medical Evidence – depending on your age and amount, we may need to coordinate a nurse for lab samples, vitals or ECG. This can be done at your convenience – weekends and evenings are no problem.
- Policy Delivery – the policy can be paper or electronic. During the application we’ll review the variables together and you will decide what your preference is for paper or electronic policy.
Working with an independent life insurance broker
A professional life insurance broker knows the market and works for you. Let us do the leg work and present you with the pricing and rationale for selecting the best carrier at the lowest price.