The purpose behind life insurance is not for your family to receive a windfall in the event of your death. Rather, the purpose of life insurance is so that your family is not devastated financially at the same time as being devastated emotionally by its loss. Obviously, the higher the policy limit of the life insurance policy you purchase, the higher the premium will be. So, when shopping for life insurance quotes, it is important to take into consideration what your goals are in order to determine the best amount of life insurance for you to purchase.
In the event of your death, you’d probably want your family to be able to live in the same manner to which they have been accustomed. Therefore, you’ll want to take into account your financial contribution to your family (don’t forgot to account for raises and bonuses that you will obtain over time). You’ll also want to consider how many years worth of your income you want to provide your family with. You probably don’t want to only obtain life insurance based on one year of your income, but on many years. Perhaps you want your spouse to be able to stay at home with the children while they are young. You’ll want to take this into account when determining the amount of life insurance you need.
You’ll want to consider more than just your income when determining how much life insurance you need. You’ll want to take into account your current expenses (don’t forget to allow for inflation), as well as foreseeable expenses (for example, college tuitions). You wouldn’t want your family to have to move out of the house because they can’t afford the mortgage. You wouldn’t want your children to not attend college because they can’t afford the tuition. Although not pleasant to think about, you may also want to take into account funeral and burial expenses that your family will incur.
Also take into consideration your current debts. You wouldn’t want debt collectors knocking down your door. You wouldn’t want your spouse to have to declare bankruptcy.
Hopefully you will live a long, healthy life. But, in the unfortunate event of an accident or illness, you can rest assured that your family will be taken care of financially. Therefore, the time is now, while you are young (or young at heart) and healthy, to consider purchasing life insurance and to determine the amount of insurance that will be enough so that your family will be well taken care of. Your family is depending on you.