How Much Life Insurance Do You Need?

If you wonder how much life insurance you need? Or how much life insurance you need for infinite banking? This is your podcast.

The most honest answer to the question of, “How much life insurance do I need?” is, “Nobody knows”. And the shortest answer to the question of “how much life insurance should I have” is probably, “MORE!” … let us explain

A lot of people settle for the life insurance they’re offered through work or from a friend, some people don’t have any life insurance at all, but people who understand how life insurance works want it and they want specific policies and certain amounts.

We are going to talk about how to get the life insurance you want, how to use the cash value while you’re alive and how to provide financial peace of mind for your family when you die.

How Much Life Insurance Do You Really Need?

One of the most common questions people have when it comes to financial planning is, “How much life insurance do I need?” Unfortunately, there is no one-size-fits-all answer. The amount of coverage you require depends on a variety of factors unique to your situation. However, one thing is certain – most Americans do not have nearly enough life insurance to provide true financial security and peace of mind for their loved ones if the unthinkable were to happen.

Many people drastically underestimate their life insurance needs. Young, single people often believe they can skip it entirely. Older folks tend to assume that once the kids are grown and the house is paid off, they no longer need coverage. But these assumptions fail to account for the full value that each individual provides to their family – both in terms of income and unpaid labor and caregiving.

Your life insurance needs boil down to two core questions:

How much cash would your family need if you died unexpectedly?
How much cash do YOU need to accomplish your financial goals while you are alive and well?

When considering your family’s needs, some of the key expenses to plan for include:

Replacing your income so your family can maintain their standard of living
Paying off your mortgage, car loans, credit cards and other debts
Providing funds for your spouse’s retirement
Leaving an inheritance or paying for your children’s college education

While term life insurance is the most affordable way to obtain a high death benefit, the premiums increase drastically in your later years, often becoming unaffordable right when you need the coverage most. This is why permanent whole life insurance can be an attractive option for longer-term needs. In addition to providing a death benefit, a whole life policy also builds cash value over time – essentially a nest egg you can access while you are still alive.

This brings us to the second question of how much life insurance you need for your OWN financial goals and needs. There is a strategy called the Infinite Banking Concept that uses a specific type of whole life insurance policy with high cash value. The idea is to “become your own banker” by using your life insurance cash value as a source of funds for major purchases, investments, business expenses, or even your retirement. Rather than constantly paying interest to finance companies and banks, you recapture that interest into your own cash value account.

Whole Life Insurance Strategies

So when deciding how much life insurance to purchase for a strategy like Infinite Banking, some important factors are:

How much can you afford to commit to the policy premiums long-term
What level of cash value do you want to build up over a 10-20 year period
Do you need to supplement your whole life policy with term coverage to provide a larger immediate death benefit for your family

The younger and healthier you are, the lower your costs will be to obtain life insurance – whether that is a term policy, whole life policy, or a combination. This is why it is so crucial to put your life insurance strategy in place as early as possible, even if you need to start small and increase your coverage over time. Life insurance, particularly cash value life insurance, is a long game. The policy you can start funding right away is better than the one you continue to put off and leave to chance.

Deciding on Whole Life Insurance Strategies

In the end, the amount of life insurance you need comes down to how well you want to take care of the people you love, both now and after you are gone.

Anytime you are making a significant financial decision, it’s important to consult with a knowledgeable professional who can properly assess your individual needs. At McFie Insurance we provide thorough education on the different types of policies available and how they can be structured to maximize your benefits. Schedule a strategy session today!

As the wise Davy Crockett once said, “Be sure you’re right, then go ahead.” Do your homework to determine the right life insurance strategy for your budget and goals – then take decisive action to put those plans in motion. Your future self and your family will be forever grateful you did.

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