Estate Planning

Planning for Special Circumstances

How Much Insurance Do I Need to Protect My Family?

by Rania Combs

NB: A version of this post was published in a recent e-newsletter. It got such a positive response, I thought I’d publish it here as well.

When discussing factors to consider when selecting a guardian, I wrote that it is your responsibility to ensure that a guardian has the financial means necessary to support your children in the event the unthinkable happens.

Typically, the assets you leave behind can be used to reimburse the guardian for expenses incurred, but life insurance can be an important tool to help you supplement your acquired assets and protect those who financially rely on you and would be affected by your death.

However determining which type of policy is right for you, how much insurance you should have, and which insurance companies are highly rated can get a bit overwhelming. So how do you make this important decision? Below are some objective sources you can turn to for help in choosing the right policy at the best price.

Independent Online Guides For Choosing Life Insurance

The Life Insurance Needs Calculator from the Life Foundation is a useful resource aimed at helping you calculate how much life insurance coverage is appropriate, based on your family’s financial needs. It takes into account information such as your annual income, amount of debt, number of children and ages, and the value of your savings and investments in making the calculation.

CNN Money 101 series also has informative articles about life insurance. It explains the difference between term and whole life insurance (and offers advice on which is best), provides a guideline about how much coverage you need, and provides buying strategies to help you get the right policy at the right price.

Getting Quotes Online

Searching for a new policy doesn’t have to be time consuming. Several Websites can help you quickly compare life insurance rates from top rated companies from the comfort of your home. These include:

By answering some simple questions online, these websites will provide you with a general guideline about how much a life insurance policy will cost. That way, you can compare costs and choose the policy that fits your individual needs.

Researching Insurance Company Ratings

You may be able to get a great rate from an insurance company, but before signing on, it’s best to check the company’s reputation to make sure that it will be able to pay the death benefits if necessary. To determine whether the company from which you are purchasing your insurance is reputable, you can look Standard & Poor’s.

Some final thoughts…

As your family grows and changes, your insurance needs will probably change too. So it is important to review your insurance during major life events, such as the birth of a child, marriage or divorce.

With life insurance, it is important to remember that the cost of insurance generally increases as you get older. To get the most reasonable rates, purchase it when you’re young and healthy.

About Rania

Rania graduated magna cum laude from South Texas College of Law Houston and is the founder of Rania Combs Law, PLLC. She has been licensed to practice law since 1994 and enjoys helping clients in Texas and North Carolina create estate plans that give them peace of mind.

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