Life insurance: How much is enough?

September is Life Insurance Awareness Month. The month of recognition serves as an annual reminder to ensure your policy fulfills your current needs, which might be quite different from when you bought it. Research shows 41% of Americans say they don’t have sufficient life insurance coverage.¹

Aligning Cost and Coverage Needs
Understanding the current and potential future financial needs of your family is fundamental. First, you’ll need to set a budget for your coverage. Knowing what you can afford is pretty straightforward; determining how much coverage you need to ensure your family is comfortable in the future can feel daunting. That’s why USBA provides a Coverage Estimator to help guide you through the process of determining your needs.

Utilizing the Coverage Estimator
The Coverage Estimator will take you through the expenses you’ll need to consider as well as existing income and assets to make sure your life insurance policy works for you and your loved ones. The tool will help you factor in the things that might impact coverage, helping you align what you need with what fits your budget.

Family’s future expenses
Determine the annual income your family would need if something were to happen to you. This includes living expenses (mortgage, rent, groceries, vehicles, utility bills), childcare, child or spouse education costs, and other expenses (entertainment, clothing, travel, etc.). Also, take into consideration any lifestyle changes that might happen after your death. 

Available Income and Assets
Understand what income and assets will be available moving forward. This includes employment income from the living spouse, social security benefits, dividends, interest on existing investments, and other miscellaneous income.

One-Time Expenses
To prevent unexpected expenses, estimate any one-time costs that could be incurred following death. While funeral and cremation costs are an inevitable burden, other potential expenses like estate or inheritance taxes, probate costs, medical costs, and unpaid debt should also be planned for.

One-Time Gain and Assets
Knowing the amount of cash and equity on hand as well as expected proceeds from one-time gains is also a key component. Take into consideration cash, savings, and equity balances, and any existing or employer-sponsored life insurance policies. Additionally, if the death of the policyholder would result in the sale of a business or additional properties, it is important to include that too.

Purchasing a Policy
Gathering the above information will help establish how much life insurance is right for your circumstances. Once you’ve determined what you and your family need, you can get a quote online, or call (877) 297-9235 to talk to a USBA Product Specialist to select and purchase the coverage that is right for you.