Life Insurance - Who Needs It, and How Much?

Life insurance is an essential part of financial planning but it can often be confusing. It is important that you understand your needs before examining the options available to you. Essentially, life insurance is designed to replace income that would be lost with the death of a wage earner. The cash provided by life insurance can help ensure that dependents are not burdened with significant debt when you die, or faced with the need to sell assets to pay outstanding bills or taxes, and, importantly, there are no federal income taxes on proceeds paid to beneficiaries. But if you are single with no dependents, you probably don't need life insurance. Assuming, however, that you do need life insurance in order to protect loved ones who depend on your income, how much is enough?

Before purchasing any life insurance, the professionals at Avery Insurance suggest that you assemble your personal financial information and review your family's needs, considering such factors as: final illness expenses, burial costs and estate taxes; funds to finance an adjustment period or a move; or on-going financial needs such as monthly bills and expenses, day care costs or college tuition bills.

Although there is no substitute for a careful evaluation of the amount of coverage needed for your personal situation, most financial experts suggest that one rule of thumb is to buy life insurance that is equal to five to seven times your annual gross income. For further information, or for a personal assessment of your life insurance needs and available options, please contact Dianne Chase at Avery Insurance at (603) 569-2515.