Is Your Life
Insurance Policy Keeping Pace with Your Life?
As your standard of living rises or your family grows, the life insurance benefit your
loved ones would need in the event of your death may also change. If it has
been a while since you last reviewed your family's life insurance needs, now
may be a good time to do so.¹
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According to a 2002 study,
families making $65,800 or more a year will spend nearly $250,000 to raise
a child from birth to age 17.²Would your current life insurance policy
provide enough income to see your children to adulthood? Would there be
enough money left over to send them to college?
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If you have purchased a new home
in recent years, a higher mortgage payment may also warrant an increase in
life insurance coverage. Even if your spouse has a well-paying job, your
mortgage payment may be too much for one person to handle alone,
especially if child-care expenses also increase.
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Many people try to estimate the
amount of life insurance they need by multiplying their annual income by
an arbitrary number. However, a more thorough calculation that takes into
account your family's specific long-term needs can help you identify the
amount of life insurance required to maintain their comfortable lifestyle
indefinitely.
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By reviewing your family's
needs on a regular basis, you can help ensure that your life insurance
policy keeps pace with your life and your dependents' needs.
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1) The cost and availability of life insurance depend on factors such as age,
health, and the type and amount of insurance purchased. Before implementing a
strategy involving life insurance, it would be prudent to make sure that you
are insurable by having the policy approved. As with most financial decisions,
there are expenses associated with the purchase of life insurance. Policies
commonly have mortality and expense charges. In addition, if a policy is
surrendered prematurely, there may be surrender charges and income tax
implications.
2) MSN Money, 2003
©
2003 Emerald Publications
