How Much Should You Have?

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One basic rule of thumb is that the death benefit on your policy should equal seven to 10 times the amount of your annual salary.  But, like any rule of thumb, that isn’t always particularly accurate. You have choices of either Term Life Insurance or Whole Life Insurance. Which is best for you depends on who you’re talking to.  The financial experts like to say about Life Insurance is; “Its only job is to replace your income when you die.” “Get a term life insurance policy for 15–20 years in length, make sure the coverage is 10–12 times your income, and you’ll be set. Life insurance isn’t supposed to be permanent.”  As you get older and closer to retirement and hopefully a pension or other retirement account, and the kids hopefully out of the house, the need for Life Insurance diminishes.  With Whole Life Insurance, the premium is a locked in price. It can’t change. Also, a slice of that premium will go into what’s called the “cash value” part of your policy.  The longer your policy lasts, the more cash value it’s supposed to build up.  Term Life Insurance provides life insurance coverage for a specific amount of time. If you or your spouse passes away at any time during this term (usually 20–30 years), your beneficiaries (those you’ve selected to inherit your money) will receive a payout from the Term Life Insurance policy.  Term Life Insurance plans are much more affordable than Whole Life Insurance.  This is because the Term Life policy has no cash value until you or your spouse passes away. In the simplest of terms, it’s not worth anything unless one of you were to die during the course of the term. Then that’s when you receive money.  Of course, the hope here at McFinn insurance Agency is you’ll never have to use your term life insurance policy at all—but if something does happen, at least you know your family will be taken care of.


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