Deciding How Much Life Insurance Coverage You Need

Life insurance is one of the most important things you can do for your family. Most people are aware they need some life insurance, but it can be challenging to determine how much you need. How much you need will depend on several factors, but you can use the DIME formula to calculate the amount that’s best for you.

Calculating Life Insurance if You Are Single

If you are single and no one else is relying on your income, you can get by with less coverage. You’ll need enough to cover your final expenses and debts, minus any assets you have. Estimate your assets. Then subtract any debts you have and what you estimate for final expenses. If the number is negative, you’ll need life insurance that is at least that amount to break even.

Example: 10,000 (assets) – 5,000 (debt) – 13,000 (final expenses) = -8,000. You would need at least $8,000 worth of life insurance. 

Calculating Life Insurance With Dependents

The picture becomes more complicated when you have others relying on your income. This can include a spouse, children, and even elderly parents. 

The DIME formula takes into account:

  • D: Debts
  • I: Income 
  • M: Mortgage
  • E: Education

Debts should include anything that you owe by yourself, or with a spouse and any final expenses.

Your income will need to be replaced if you have others depending on it. Your yearly income times 10 is a good rule of thumb. However, if you have young children, you may want to consider using the number of years they will be in school or the number of years your spouse will rely on your income. 

Mortgage is the amount it would take to pay off your home. If you plan on sending children to college, you should add the estimated expense of college as well. Add all these items together, and that’s how much life insurance you will need. 

If you need life insurance, contact us at Greater Cincinnati Insurance Services in Cincinnati, OH. We can help you determine the right amount of coverage for your needs.

Shopping for Life Insurance? 5 Tips to Getting the Best Coverage

Life insurance is an investment in your family’s future. It provides financial security for your family in the event of your untimely demise. The right life insurance policy from Greater Cincinnati Insurance Services in Cincinnati, OH will give you peace of mind that your loved ones will be well provided for after you’re gone. The following tips can help you make good life insurance decisions to maximize your coverage.

Research Your Options

Research your options to learn more about policy types. Learn the difference between term life and permanent (whole and universal) life insurance so you can choose wisely. Select a policy that fits your budget and offers the protection you and your family need.

Decide Length of Coverage

There are two basic types of life insurance coverage: term life and permanent life. Term life lasts a specific time period (10, 20, 30 years) while permanent life lasts the duration of your life. Do you want coverage to protect your kids as they’re growing up? Then term life may be more suited to your needs. If you want lifetime protection for your spouse and family, consider what a permanent life policy has to offer.

Decide Amount of Coverage

Determine how much coverage you need to protect your family, taking into consideration your mortgage, loans, income, monthly budget, family expenses (childcare, school needs, extracurricular activities), etc.

Enhance Coverage with Endorsements

Ask your agent if you can customize your life insurance policy by adding endorsements that provide you with the quality protection you need at a price you can afford.

Work with a Trustworthy Insurer

Work with an insurance company that has your best interests at heart to get the most for your investment. For quality life insurance coverage at affordable costs, contact Greater Cincinnati Insurance Services in Cincinnati, OH.

Life Insurance: A Plus for Singles

Many singles feel life insurance is an unnecessary expense at this stage of their life. Life insurance, however, can provide singles with financial security to help loved ones after they’re gone. If you’re single, here are a few ways that a life policy from Greater Cincinnati Insurance Services in Cincinnati, OH can benefit you and those you love.

Pay Off Outstanding Debts

If you’ve recently graduated from college, you may have outstanding student loans to pay off. In fact, your parent or another family member may have even co-signed for these loans, enabling you to complete your education. If you were to pass on suddenly, these co-signers could be held responsible for these debts, putting them under financial pressure. Life insurance can help pay off outstanding debts to include student loans, home loans, etc., so others don’t have to assume this responsibility.

Support Loved Ones in Need

If you’re supporting aging parents in retirement or providing financial aid to a younger sibling to get through college, your sudden demise could put your family in a financial bind. With a life insurance policy, you don’t have to worry about your family’s financial future after you’re gone. You can designate that benefits are distributed among family members you’re supporting so they can continue to receive the financial help they need to carry on.  

Pay Funeral Costs

Few young people today make arrangements for funeral expenses in advance, although this can be a costly matter. Life insurance benefits can go towards paying funeral expenses in the event of your untimely demise. This alleviates your loved ones from this financial burden at the same time they’re trying to cope with your loss. 

For help selecting a life insurance policy or to learn more about policy options and costs, contact us at Greater Cincinnati Insurance Services in Cincinnati, OH.