How much life insurance do I need?
Life insurance is a lump sum payment to cover the lack of these future cashflows should you pass away. Life insurance is designed to paydown debt, pay for immediate expenses such as funeral & estate costs, fund spouses future expenditure, future education expenses, and other family financial requirements.
Determining how much life insurance you need depends on various factors, such as your age, income, debts, dependents, and lifestyle. Here are some steps to help you estimate how much insurance you may need:
- Calculate your financial obligations: Add up your outstanding debts, such as mortgages, car loans, credit card balances, and student loans.
- Estimate future expenses: Think about future expenses, such as college tuition for your children or retirement savings for your spouse.
- Consider your income: Think about how much income your family would need to maintain their standard of living if you were to pass away. A general rule of thumb is to have life insurance coverage that is 10-12 times your annual income.
- Factor in any dependents: If you have children or other dependents, you may need more life insurance coverage to ensure that they are financially secure.
- Evaluate your lifestyle: If you have a high-risk lifestyle, such as extreme sports or dangerous hobbies, you may need more coverage.
- Consult with a financial professional: You can calculate your insurance needs by using the MoneySmart savings calculator or by requesting a Complimentary Insurance Review with a member of the United Global Capital advice team.
By considering these factors, you can estimate how much life insurance you need to help protect your loved ones in the event of your unexpected passing.
GENERAL ADVICE AND PAST PERFORMANCE WARNING
This article has been prepared by United Global Capital Pty Ltd (ACN: 154 158 273, ABN: 25 154 158 273, AFSL: 496179).
This article contains general information only and is not intended to provide any person with financial advice. It does not take into account any person’s (or class of persons) investment objectives, financial situation or particular needs, and should not be used as the basis for making any investment or financial decisions. United Global Capital Pty Ltd does not make any representation as to the accuracy, completeness, relevance or suitability of the information, conclusions, recommendations or opinions contained in this article (including, but not limited to any forecasts made). No liability is accepted by United Global Capital Pty Ltd or its directors, officers, employees, agents or advisors for any such information, conclusions, recommendations or opinions to the fullest extent possible under applicable laws.
Anyone considering making any investment decisions based on the information contained in this presentation should note that past performance, target returns or estimates of returns is not a reliable indicator of future performance and actual results can vary significantly.