You’re Worth More Than You Think : How You Should Be Calculating Your Life Insurance Pay Out

By Dan Cole

The decision to buy life insurance is often very overwhelming. How much should I buy? What type should I buy? What company should I choose? These questions are layered on top of having to consider and plan for one’s untimely demise; what fun!

I direct this brief introduction to the first-time life insurance purchaser. Are you married? Do you have any children? If the answer is yes, then you should be considering life insurance. Please keep in mind that the policy you have through work is rarely enough to fill the financial void created if you are no longer here to support your family.

$100,000 sounds like a lot of money to many of us. In some ways, it is. However…How much money did you make last year? How much will you make this year? How about next year? And the year after and after, and so on? Let’s say your salary is $75,000, and you are 35 years old and think you might retire at 65. Assuming you don’t get a raise, you will earn $2,250,000 over your lifetime.

This may sound crazy, but it’s true. You’re worth a lot! Does your work policy cover an excess of $2,000,000?I’m sure at this point you’re saying, “a 2 million dollar life insurance policy must cost a fortune!” If you’re in reasonably good health, you could probably get this policy for a little over a hundred dollars per month.

Would it be important to you to have the coverage your spouse and children need for a cost similar to your cable bill?