Life Insurance and how much is enough? If you are leaving a legacy to your family and your family is young, they need income. Raising a family is more costly than not raising a family and putting kids through school, buying clothes, and medical costs is not cheap, but a lot cheaper if only one spouse is left. Determining amounts will vary and almost every life insurance agent will tell you something different. Some will say that you need to replace 5 years of income of the deceased partner. That’s not a bad idea and will certainly give a family a fair amount of time to recover and find jobs and pay for the basics. But is it enough?
Here is a simple rule. Every $100,000 dollars, put into an annuity, will throw off about $458 dollars a month in income….$250,000 will give about $12,500 a year or about 1040 a month. And $500,000 will give about $2100 a month and $1,000,000 dollars will throw off about $4200 a month. All of this is based on about 5.5% interest, give or take. Most families, not buying anything extra will be allowed to live a very long time on the income generated from a Million Tax-Free dollars.
So how much life insurance is enough would entirely depend on how frugal the family is. Of course if they took $400,000 of those $million dollars right off the top and purchased a home with only $4,000 dollars a year in taxes, resulting in about $400 a month in property tax, the other $2750 dollars a month generated by the remaining $600,000 death benefit, would be enough for most folks. Everyone has a different need and we can help you determine and set a plan up. Call us for more information or click on LIFEpdq for more information.