How Do I Determine How Much Life Insurance I Need?

You may know that life insurance is important for your family’s financial security, but how much life insurance you need can be more complex. At Brevard Insurance Agency Inc in Brevard, NC, we can help you determine how much life insurance is right for you. 

Basic Formula for Determining Life Insurance Face Value 

Face value is the amount your policy will pay in the event of your death. If you want to keep how much life insurance you should have as simple as possible, multiply your annual income by 10. This is the least amount of life insurance you should carry.

Some experts recommend multiplying your annual salary by 15 and using that as your minimum face value amount. 

However, you may want to use this as a base amount, and adjust it based on a few important factors. 

Debt 

Debt doesn’t go away, even in death. If you leave behind debt, your family members may be financially responsible. The last thing you want to do is burden grieving loved ones. 

To avoid this, it’s a good idea to consider how much debt you have when you are deciding on policy coverage.

The recommended method is to add all your current debts. Then add this to the income figure from the last step. 

Income Replacement 

You’ll also need to consider income replacement. If you have dependents, income replacement is important. If you have a spouse, aging parents, or a child that are relying on your income, life insurance is essential. 

When determining how much coverage you need, think about how many years of income you want to replace. If you have a teenage child, 10 years may be sufficient. However, if you have a spouse and a one-year-old, 20 years is a safer option. 

Contact Us Today

If you need life insurance in Brevard, NC, contact us at Brevard Insurance Agency Inc. Our agents will work with you to provide the right policy for your needs. 

How Does Life Insurance Work?

There are many benefits of life insurance for anyone who wants to protect their loved ones or beneficiaries. However, as much as most people know it is essential, they also admit they do not understand how it works. That is why Brevard Insurance Agency Inc of Brevard, NC takes explains how life insurance works.

What is Life Insurance

It is a contract between you (the insurance policyholder) and the insurance company where if you pass away, your loved ones receive a lump sum of cash based on the premiums you paid when you were alive. Below are the different types of life insurance and how they work.

Term Life Insurance

Just as the name suggests, this type of coverage is for a specific length of time, and you will find most people opting for it as they consider it affordable. If one dies during the years they were earning, the family members can use the payout to replace the income they were getting, especially if they were the sole provider in that family. Beneficiaries can put that money into various uses like funeral expenses, kids’ tuition fees, and other house expenses. This policy comes with flexibility, where you can choose the length of term you want.

Universal Life Insurance

This is a permanent type of life insurance accompanied by a flexible premium structure. One benefit of this type of policy is that you can adjust it when your financial circumstances change, as long as you sufficiently pay the required premiums.

Whole Life Insurance

Whole life insurance provides one with coverage to last them their entire life as long as they keep paying the premiums on time. It comes with a fixed cost based on your age when buying it and guarantees a growing cash value. After you die, your beneficiaries will receive a payout as long as you made sufficient payments.

Variable Universal Life Insurance

This type of policy helps protect your beneficiaries while giving you the flexibility to invest. You, therefore, get to choose where you are comfortable investing your cash.

To enjoy life insurance benefits, Brevard, NC residents can contact Brevard Insurance Agency Inc for assistance in picking the right life insurance policy to protect their beneficiaries.

I’m Young. How Would Life Insurance Benefit Me?

As a young person, you may feel that you don’t have much need for life insurance. Your reasoning may be even stronger if you are unmarried and don’t have any offspring. However, life insurance has many benefits for people of all ages. However, a fundamental understanding of what it is, how it works, and how it can benefit you in particular, is the best place to start.

What Is Life Insurance?

Life insurance is a contract between the policyholder and the life insurance company. You agree to pay premiums in exchange for a death benefit that is awarded to your chosen beneficiaries when you die. The insurance company awards your beneficiaries a lump sum of money. The monies can be used however the beneficiaries choose to use it. There are two kinds of life insurance that include whole life and term life insurance. Of course, whole life insurance is purchased to cover your entire life. This means that is isn’t set to expire until you die, as long as your premiums are paid. Term life insurance is designed to last for a pre-set number of years. This number is usually determined by your major financial obligations. Term life policies are designed to remain in place until your last major financial obligation is met. This type of insurance is usually sold in five-year increments and typically can go up to thirty years. However, life insurance has other less known benefits as well.

What Are Other Benefits of Life Insurance?

The younger you are when you buy life insurance, the better. This is generally true because life insurance is less expensive when it is purchased when you are under the age of thirty-five. As a result, one of the obvious benefits of investing in life insurance as a young person, aside from creating financial security, is the reduced rate that you’ll lock in which will make it more affordable. also, life insurance can be used to pay off your debts and to cover lost income. Life insurance has many practical uses even for young people. The Brevard Insurance Agency, Inc of Brevard, NC is committed to helping young people as well as people of all ages, understand life insurance, and get the coverage best suited for their particular needs.