Life insurance is an important investment for you and the loved ones who depend on you. Securing the proper life insurance is the foundation of solid personal finances. Knowing that your loved ones are financially secure, should something happen to you prematurely, is usually the reason most people invest in life insurance. This article offers four core principles to consider before choosing your life insurance.
Understanding the potential needs of your beneficiaries can also help you decide how much insurance you should have. Don’t follow any “rule of thumb” guidelines you may read. Your needs are specific to you. Your decision will depend on the math. How much money do your dependents need each year and for how long? Because your children are likely different ages, that number is different for each beneficiary. Calculate the needs of each dependent annually, multiple times the number of years support is needed and then add those numbers together so all dependents have what they need.
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