For the second part of this life insurance centric blog series titled “What is my life worth?”, the focus will shift to answering the crucial question “how much am I worth?” You are invaluable to your loved ones. But, when considering life insurance it is important to ask yourself three fundamental questions:
- Who depends on me and my income?
- How much do I contribute to my household?
- How much debt do I have that would be transferred on to my family if I were to pass prematurely?
The answers to these questions should help to guide anyone considering life insurance through how much coverage they should be getting. Considering which policy to purchase may be a difficult process, but making that decision can help to ensure that your family will be able to maintain their lifestyle without financial disruption.
If something were to happen to your income, who, if anyone, would suffer financially? The actual financial need for each household varies greatly based on a multitude of variables (number of people contributing income to the household, number of children, location, etc.). Likewise, each individual’s contribution to their household income varies. Are you the sole breadwinner for your family? Or, is there another person contributing significantly to the household? The amount you bring in and how essential this income is for your family to remain afloat can be the basis for your policy.
The next step is to consider the funeral costs and other final expenses, such as potential medical bills, that will fall upon the family should you pass on prematurely. According to the most recent “2017 General Price List Survey” conducted by the National Funeral Director Association (NFDA), the average cost of a funeral in 2017 was $7,360.00. This cost and all other final expenses (student or other loans, medical care, etc.) will fall upon your loved ones to afford. Take into account any debt you currently carry, particularly if you have had a cosigner.
According to the article “Protect Cosigners, Families of Student Loan Borrowers With Life Insurance” for U.S. News & World Report by staff writer Susannah Snider, life insurance policies may be a good buffer for student loan borrowers with cosigners. The article writes: “If the responsibility for a student's loans transferring over would be unmanageable or financially devastating for the student's survivors, then a life insurance policy may give peace of mind.” While loans may be easier to track and plan ahead for, It is not possible to predict an exact cost of medical care should you fall ill. However, it is possible to prepare for these potential costs with you life insurance policy by selecting an amount high enough to buffer these expenses.
If you are interested in learning more about life insurance policy options offered through your New York State Bar Association membership, check out the NYSBA Insurance Program online here.