Host: How much life insurance do I need?
Bob Ley: Some insurance agents, some financial advisors recommend somewhere between 10 and 20 times your annual income is required to pay your final expenses as well as provide a steady income stream for your family. The proceeds or death benefit from your Life Insurance policy could be invested in an interest bearing account and your family or beneficiary could use the interest earned to provide a steady income stream. Some of the expenses they will face upon your death are, final expenses, these could include unpaid hospital bills, funeral expenses, unpaid debts, probate cost, the state inheritance taxes. Readjustment fund, this maybe used to cushion the immediate life style adjustment that the family must make when a loved one dies. The family maybe forced to move or the surviving spouse might have to look for a new job. A working spouse may find it difficult to return to work immediately after the death of the partner. The readjustment fund allows for adequate bereavement due to loss. Supplemental income after the readjustment period there should be a consistent income stream to help pay for the family's living expenses, such as mortgage payments, monthly bills, day care etcetera. Educational fund, adequate fund should be available for the children's education. This might include elementary school, high school and college. Retirement fund, there should also be adequate funds available to insure that the spouse can retire comfortably.