August 30, 2021
Life insurance has one main job—helping to protect your family’s financial security in the event of your death.
And it does that by providing your loved ones with a one-time payout that replaces your income.
Your family depends on you to provide. It’s how they afford necessities like food and shelter. It’s also how you support them with their lifestyle.
But if you pass away, your income dries up. Your family would have to face their financial responsibilities with fewer resources.
That’s where life insurance helps. If you pass away, your family receives a benefit that can help ease the financial pressure.
Instead of a yearly salary, your loved ones now receive a once-in-a-lifetime salary.
That’s why it’s common to base the size of your life insurance policy on your income. Rule of thumb, you want a policy that’s 10X your annual income.
So if you currently earn $60,000, you probably would need a $600,000 policy.
There are factors besides income to consider. For instance, your family may need more protection if you’re paying off a mortgage.
In conclusion, if anyone you love depends on your income, you need life insurance. It’s a way to provide for your family, even if you’ve passed away.
This article is for informational purposes only and is not intended to promote any certain products, plans, or policies that may be available to you. Any examples used in this article are hypothetical. Before enacting a savings or retirement strategy, or purchasing a life insurance policy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.