Many people I work with realize that they need some kind of life insurance once they start having kids. The purpose of life insurance, of course, is to ensure that everyone in your household can maintain their standard of living if you die prematurely. And as soon as other people start relying on income you haven’t earned yet to live, it’s probably time to consider some coverage.
The problem seems straight forward, but the options are confusing. First, there’s more than one type of life insurance. Whole, variable, universal, and term are the predominant options available. While insurance agents love to sell the first three (because they’re the most profitable to the insurance company, and therefore pay the greatest commissions) term is the least expensive and usually the best fit.
I’ve written in the past about why most people seeking life insurance should steer clear of permanent insurance policies. But what about the second part of the equation: how much do you really need?
There are two predominant ways to figure this out: human life value and a life insurance needs analysis. Today’s post will explore both methods.