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Education Centre What do I need to take into account when deciding how much Life Insurance I need?
Education Centre What do I need to take into account when deciding how much Life Insurance I need? | What do I need to take into account when deciding how much Life Insurance I need? |
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The purpose of Life Insurance is to let your family continue with their day to day expenses and be able to maintain their present lifestyle in case you are not around. The insurance cover therefore must be just right to see them thru’ all those years of need.
Following is the list of factors which you need to take into account while deciding the total amount of Life Insurance you require.
1. Immediate Liabilities Loan payment, Credit Card payment, emergency cash medical expenses hospital expenses funeral expenses lawyer expenses 2. Annual Expenses of your family Living Expenses (Food, travel, clothing, bills, entertainment) Spouse’ Expenses Expenses on Children (fee etc) 3. Expected Annual Income of your family Income of your spouse Income from rentals if any 4. Expected Rise in Family’s Expenses (like higher studies for your children, for child’s wedding) 5. Expected Rise in Family’s Income (like increment in spouse’ salary) 6. The total value of your assets at present. 7. Total number of years for which you would like your family to receive Insurance Payout. Premium is affected by the number of payout years. The above factors will give you a good idea of the total amount your family needs. You can then multiply this amount to the total number of years for which you wish to provide financial protection to your family. Don’t be overwhelmed by the total figure you get. That would be for real. That IS the real amount of money you would need and you need to set your premium for the amount which will ensure that your family does not have to compromise on its way of living and is able to meet financial commitments with ease. |
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