Financial Planning

How Much Is Enough?

Tuesday, July 13th, 2010 Marvin H. Feldman, CLU, ChFC, RFC, President and CEO of the LIFE Foundation

I received a phone call from a person I had never met to review his insurance. He had recently moved from California, had a 1-year-old baby and felt he needed to replace his group term life insurance, which his company had reduced after recently being acquired by another firm.

I spent time with him and his wife reviewing their financial needs and asking a series of questions about their current and future goals, and then I suggested they go to LIFE’s online Life Insurance Needs Calculator and the Human Life Value Calculator on the LIFE website. We scheduled a follow-up appointment for the next week.

When they returned to my office, I asked if they had run their own numbers based on their requirements. They had, and they determined they needed substantially more life insurance than they currently owned, including new coverage on both the husband and wife, along with a small policy for their baby.

While I guided them through the decision-making process, they determined the amount they actually needed. It worked out to be a similar number to what I had originally calculated, but now it was their number, not mine.

If you are unsure about how much life insurance you and your family need, check out these insurance calculators on our website. It may be one of the best decisions you make for your family.

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About the Author

Marvin H. Feldman, CLU, ChFC, RFC, President and CEO of the LIFE Foundation

Written by Marvin H. Feldman, CLU, ChFC, RFC, President and CEO of the LIFE Foundation

10 Comments to "How Much Is Enough?"

  1. Coversure - Caravan Insurance

    July 21, 2010

    This is a good article. Life insurance can often be a tricky thing to tackle but those insurance calculators are actually really helpful!

    Reply

  2. Individual Health Insurance Texas Place

    July 26, 2010

    Most young couples today never even consider life insurance. If its a term policy, couples should choose the longest term available so that they can keep their premium reasonable as long as possible.

    Reply

  3. life insurance for children

    July 26, 2010

    These are great tools to give someone to use. I should probably do the same for my site because it’s true that most people wouldn’t know how much to get nor would they understand the financial responsibility of what it’s going to take in order to have a policy for a certain amount.

    Reply

  4. George the Final Expense Expert

    July 26, 2010

    As an insurance agent I agree. In our lives we would never want to imagine our loved ones dying, but in reality this is something we all need to be financially prepared for. Time and time again I hear stories of families left in financial ruin because they weren’t prepared.

    George

    Reply

  5. Leonard Robbins

    July 26, 2010

    Well said! Too often individuals in the market for life insurance fail to think about the total amount in terms of what this money needs to accomplish.

    I think your suggestions regarding determining how much coverage are excellent, and I plan to sent potential clients to these links.

    Reply

  6. Brian

    July 27, 2010

    Hi Marvin,

    Thank you for putting these calculators online. They’re really well made, plus you’re completely right about it being an easier conversation with a prospect when they have “their” numbers versus what you’re necessarily recommending, even if they end up being the same.

    Reply

  7. Terry Johnston

    July 27, 2010

    Excellent advice Marvin. I find most people very much under-estimate the amount of life Insurance they need.

    A million dollar policy might seem like quite bit and it is, but a million dollars in Life Insurance proceeds may need to provide an income stream or $50 $60 or $70 thousand per year for many years, sometimes 20 or more.

    Looked at like that a million dollar policy doesn’t like so much any more.

    Regards

    Terry Johnston CFP

    Reply

  8. jason the life insurance marketing champ

    July 28, 2010

    Marvin,

    One key thing you pointed out in your post is that your clients owned the number of their life insurance protection. The biggest policies I’ve ever written have been from simply asking my clients how much coverage they wanted instead of going through a detailed “needs analysis”.

    Jason

    Reply

  9. Samy786

    September 2, 2010

    one way of deciding how much life insurance to purchase is to literally sit down and account for all that you would expect your life cover policy to take care of should you die unexpectedly. You would take things like household bonds, mortgages, loans, kids education expenses, daily living expanses and any and every other expense you may think of no matter how minute it may seem, these little ones tend to add up eventually. This will give you a very good idea of how much life insurance your family would require to continue living a comfortable life.

    Reply

  10. 20 Year Term Insurance

    October 20, 2010

    If young couples would take just few minutes and secure a term policy while they can get the best rate. This would be one of their best investments.

    Reply

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