Fighting death and winning is only a part of life. Death stalks every human and eventually calls to every individual. Although it is hard to consider, taking measures to secure the financial future of greiving loved ones is an important part of ensuring a death does not leave troubles behind. Recognizing that life insurance is important is only the start. It is also vital to determine an appropriate amount to leave behind.
Organizing Financial Data
Before it is possible to determine the amount necessary for life insurance, it is important to gather financial information together. According to Kimberly Lankford on Kiplinger.com, life insurance funds are used to pay for funeral expenses, debts, the school expenses of children and general living expenses while the family is grieving. That means all of the figures are necessary to calculate the final amount needed for a family.
Add the cost of education for each child, the debts and an estimate of funeral costs for the foundation of the calculation. Funeral costs range from $8,000 to $15,000 or more, depending on factors like the location, traditions and the selected type of funeral.
The calculation for living expenses will depend on the family needs and the current income level. The amount required to pay for living expenses will depend on the situation, but a family can manage if the insurance calculates the income requirements based on an investment that returns a conservative five to six percent. For example, putting $1,000,000 in conservative investments to gain six percent will result in $60,000 a year, which can pay for many living expenses family members will face.
Life insurance needs will vary based on the family and the situation. In general, it should calculate the expense based on the goals of the family, current debts and the gap in income that will develop. The amount required will depend on the family.