The death of a loved one can be emotionally devastating, but it can also be financially devastating when that loved one was providing for the family. In fact, the loss of income from the death of a spouse is one of the major causes of bankruptcy in America.
Here’s your ounce of protection against the financial calamity caused by the provider’s death: Term Life Insurance.
Knowing what you need is not as easy as how much. To answer that daunting question, you need to first determine the amount of income you would lose, due to the death of your spouse (or vice versa).
Some things to consider when determining how much life insurance you will need:
Who’s expenses are you covering by purchasing life insurance?
The most common answer to this question is your spouse and children (who are not yet adults).
You basically want to cover your income, for the time required, and any expenses you leave behind. For example, if you have one small child you probably want to cover your income until he is old enough to live on his own, and cover the cost of your funeral as well. Beyond that, you may also decide that you would to cover (or at least contribute to) your child’s college education. You would need to figure what the cost of a state college or university will be when junior graduates high school. You can find some info on this at the sites listed below, but it’s essentially an educated guess.
Mortgage and Other Loan Payoffs.
You may want to ensure that your family has enough to pay off your debts and start with a clean sheet. To that end, you’ll want to add up the outstanding balances on any mortgages and car loans you have.
Resources:
How to afford high education costs?
Popular Posts