If something were to happen to you, who do you leave behind? How do they replace the your income in order to keep living the life they are used to? This is what term life insurance is for. It is probably less expensive than you think.
One of the most common questions I get about life insurance is, “how much do I need?” and here I will explain how I answer that. The amount of insurance needed will affect the monthly premium.
My Simple Method
It is easiest to remember it by calling it the DIME method. Take your Debts, add that to 10 times your Income, add your Mortgage, and then add any additional Expenses you need to (maybe related to education for your children for example).
Example Case Scenario:
A couple with one child, they are both 35 years old, non-smokers in excellent health. They have a house and have some school loans and a car payment.
$15,000 in Debt
each makes $50,000 a year Income
their Mortgage is $250,000
they want to set aside $35,000 for a college fund if something were to happen to them (other Expenses)
The math is $15,000 + (10 x $50,000) + $250,000 + $35,000 = $800,000 in coverage for each.
I would advise them to first look at a 20 year term of $800,000 which would cost about $32 a month for him and $27 for her. If they wanted to lock in a rate for 30 years, it would be $61 for him and $50 for her, per month. I have seen people pay that same rate for $100,000 worth of coverage, because the agent they used was locked into using just one insurance carrier.
RELATED ARTICLE: Why Use an Independent Agent?
Factors
Besides the amount of life insurance I am quoting, the price is determined by age and length of the term, gender, tobacco use, and health questions. Each insurance carrier has its own pricing. I compare prices with 45 companies when I run a quote to find the best rate and product.
That’s the quick way to determine your needs. To get a personalized quote on your life insurance, please give me a call or an email.
*This is an example of a real case I worked on for clients in Tennessee. Your situation will be different, determined by the factors I mentioned.
