If you are the only earning members in your family or somehow your family depends on you financially then it is very important for you to make sure their financial needs are met even when you are no more.
We all want our children to complete education without any financial hurdle, you are a spouse and family members should never fall short of the basic necessities of life.
Buying a decent insurance policy is one of the most preferred way to ensure this. But as we cannot predict the need for their family member’s years from now it is really confusing for people to decide the amount of insurance we need to take.
There are several factors which determined the amount of insurance one should go for, most common of them are as follows.
Your current age is one of the biggest determining factor. Usually young people do not have many people financially dependent on them does the required less amount of insurance, however it is advisable to start insurance early in life because the older you get premium charges would increase.
It also depends a lot on the age of your children and spouse too, as you need to determine the total number of years of replacement they will require. Generally you can assume that your children will require financial support till they graduate from college and find a job.
You need to consider any mortgage debt you have under your, like your house loan, car loan or any other loans.
You don’t have to consider only the in general expenses but also make sure that you will fulfill any of the special need of your children like higher education or wedding expenses.
The basic idea is to have enough insurance so that they do not have to shift their lifestyle or standard of living.
There are three well-known methods which can be used to determine the amount of insurance you will need.
However, you need to consider that your insurance policy is not an investment, it is just a protection for your family. So you should avoid over insurance as well as under insurance.
Right financial planners will help you decide the relevant amount and also guide you towards taking the right route to achieve that.