Before buying MA life insurance, it is important to think about how much coverage you will need. Since life insurance is intended to provide financial support to your survivors, the figure should take into account several different aspects of your life. Here are some important considerations.
Amount of Debt
We all have debt. Whether it’s credit cards, student loans, car loans, or personal loans, those debts become the burden of your heirs in the event of your passing. Any assets that you may have, such as savings or 401k, could be offset or eliminated by your debt, leaving your heirs with little remaining support. Consider how much debt you have when selecting your MA insurance coverage amount. Ensure that it is sufficient to relieve any potential burden on your family.
Would you like your spouse and children to remain living in your home? If so, you may need to have enough MA life insurance to pay off the remaining balance on your mortgage. Otherwise, your family may be forced to sell the home if they cannot afford the mortgage payments and home maintenance expenses. The same goes for car loans and other similar assets.
Maintaining a Standard of Living
When you pass away, your family not only deals with the emotional and psychological impact of your passing, but they also lose the critical financial support that you provide. Your wages/earnings provides a certain standard of living to your family. If you would like them to maintain that lifestyle after your passing, consider lost wages into your MA life insurance coverage calculations.
Funerals are costly! Common expenses include funeral home fees, a casket purchase, burial/cremation costs, flowers, and post-funeral reception. Additionally, if you have family members flying in from out-of-town, your family may be feeding quite a few people during the days prior to and after your funeral. These expenses add-up quickly and can create additional financial hardship. Be sure to include funeral expenses in your MA life insurance coverage amount.
So, How Much Life Insurance Coverage Do You Need?
Ideally, your MA life insurance policy should be enough to pay off your debts, settle your mortgage and car loans, replace your lost wages for a certain number of years, and cover your funeral expenses. This will minimize the financial burden faced by your family and allow them to maintain a familiar standard of living in your absence.