How Much Life Insurance Do You Need?
there are many factors to consider when calculating life insurance, marital status, dependents, earnings of each spouses, how much time you have left to work and debts. these factors change. so, it would be wise to consult a trusted financial planner before making any decisions. but the main thing to keep in mind is the amount of life insurance must be enough to replace the earnings power of the deceased for those that depend on them. buying life insurance doesn't make sense for everyone. if you have no dependents and have assets that cover your debts and a cost of dying ?, then insurance is an unnecessary cost for you. if you do have dependents, but you heve enough ? assets to provide for them ? then you do not need life insurance. however, if you have dependents especially if you are the primary provider or significant debts that outweigh your assets, then you likely will need insurance so that your dependents are looked after if something happens to you. let's imagine a simplified example of replacement income. eimy earns $50,000 per year and is the sole earner for her husband bob and child and they have no debts. if eimy passed away, the household income will go to $0. bob will then need to find a job and take care of his child. so, to replace most of income and ? family provided for, eimy will need about $750,000 ? life insurance. that money could be invested at around 5% and drawn down monthly over 30 years. so, bob could have about $45,000 per year income. add $10,000 for funeral costs and the adjustment for inflation and eimy needs approximately $900,000 to $975,000 of insurance ?. every situation will be different. for example, bob could find a job in a couple of years or their child might need more money for college. these unique situations require the advice of registered financial planner who can make sure your needs ?. they can calculate an estimate of what coverage you need and can speculate on potential interest rates, taxes and inflation.
- marital status・・・配偶者の有無
- earnings power・・・収入力
- replacement income・・・所得代替
- household income・・・家計所得