Ray and Anna just celebrated their fifth wedding anniversary in their recently purchased new home. They are a typical young family with one three-year-old child, another on the way and a playful little dog. Their household expenses are average, and in addition to their monthly mortgage, they also have an auto loan payment to meet. Ray is the main breadwinner since Anna left her job to stay home with their children. They manage their income well and are able to meet their financial obligations. Life is good. Last month Ray looked into a life insurance policy which would protect his wife and child financially if something should happen to him. He was pleasantly surprised at the options and was able to choose a policy for his needs at an affordable rate.
Life insurance is an essential protection plan that ensures your family is financially provided for upon your death. Determining how much protection you need varies, but there are some rules of thumb you can use to consider what your plan should cover.
You and your spouse’s age: Your age can determine premium rates and the most cost-effective options available to you. The ages of your spouse and children can help estimate the approximate years of income replacement they would need if you’re no longer there.
Your current income: Depending on your age, and if your spouse and children are older, this may or may not need to be fully replaced, in which case you could start at 50 percent replacement. However, for relatively young families with small children, the payout should be calculated around ten times your annual taxable earnings to assure your family’s expenses can be met for at least the next five years.
Mortgages, loans and other debts: House and vehicle payments, student loans, home improvement loans and/or other types of debts should be calculated and included in your plan.
College expenses: Future education expenses for your children, including tuitions and fees, should be accounted for. Although it’s hard to predict the future of rising costs, look at the current increase in college expenses and predict accordingly what they could be by the time your children reach college age.
Funeral expenses: This can be a fairly large expense for loved ones to bear without an income plan to help cover these expenditures.
Remember, not all life insurance policies are “one size fits all.” For example, plans that payout for your children may be temporary or until your children become of age and are able to take care of themselves. Other policies designed for a child who is unable to become self-supporting, such as a special needs child, may payout the rest of his or her life. When shopping for a life insurance policy, keep these things in mind for better peace of mind.
Protect your loved ones. Call Adcock-Adcock Insurance Agency at (813) 933-6691 for more information on Tampa life insurance.
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