How Much Life Insurance Do I Need?
How much protection does a family need? That's a difficult question because it depends on so many factors that can't be predicted - like how long you will live. A simple approach is to plan for the worst case (e.g., immediate death) and decide how much money surviving family or loved ones will need to handle such matters as:
- Final expenses, including funeral costs
- Debts, including mortgage
- Estate taxes
- College expenses for children
- Survivor living expenses
The last category is in many cases the most difficult to compute. Perhaps the best philosophy is to plan for the family to "remain in their own world" by providing the resources they will need to maintain the standard of living to which they are accustomed. An important process of financial planning is to explore the many variables and how they can affect this goal.
Number of Years to be Provided For:
If you could be sure of living a long life, this number may be small; but the purpose of life insurance is to provide a death benefit for survivors if you aren't so fortunate.
Number of Dependents, Such as Spouse and Children:
The age(s) of children also matters, as income earnings could be limited in the case of a surviving spouse who wishes to stay at home with the children until they are older.
Desired Standard of Living:
Unless you want your spouse and children to suffer a decline in their accustomed standard of living, it is wise to consider the impact of inflation and plan accordingly.
Pacific Life Insurance Company is licensed to issue individual life insurance and annuity products in all states except New York. Product availability and features may vary by state.
For more information on this subject, and professional guidance in selecting the right kind and amount of insurance coverage, contact your insurance professional.
This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state or local tax penalties. This material is written to support the promotion or marketing of the transaction(s) or matter(s) addressed by this material. Pacific Life, its distributors and their respective representatives do not provide tax, accounting or legal advice. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.
Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York, and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state.Each company is solely responsible for the financial obligations accruing under the products it issues, and its product and rider guarantees are backed by that company’s financial strength and claims-paying ability. Variable insurance products are distributed by Pacific Select Distributors, Inc. (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company, and are available through licensed third party broker-dealers.
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