Owning the right amount of life insurance is important to protect your family. With the global pandemic raging on, you don’t want to come up short on your life insurance needs.
If you haven’t done so already, calculate your net worth to assess how you did this past year. Hopefully, you’ve grown your net worth in this incredible 10+-year bull market through aggressive savings, retirement company matches, a diversified investment portfolio, rental property cash-flow, and more.
Once you’ve calculated your net worth, make sure your life insurance levels equals this amount, especially if you have dependents, or a spouse who makes much less than you. If you die, and want your loved ones to maintain a similar standard of living, consider matching your life insurance amount with your family’s net worth amount.
Some might not agree with this life insurance guideline and wonder whether it would be better to have insurance that equals a family’s debt level only. Having enough life insurance to pay off all of your family’s debt is better than no life insurance at all.
If you’re single and have no dependents, do you really need life insurance? Probably not, but it’s still not a bad idea. If you die with a million bucks in debt, you’re living large!
As a father of two young children, I often think about the right amount of life insurance to protect my family. Let’s go through an example to see what is the right amount of life insurance to protect different types of families.