Choosing how much life insurance is a deeply personal decision because it involves determining how much money your loved ones need to support themselves, your family and pay off any outstanding debts should something happen to you. With that said, most financial service professionals recommend that you purchase a life insurance policy that is 6 to 10 times the amount of your annual salary. As a rule of thumb, choose your highest annual salary to date, particularly if your current income is less than it has been in the past. Additionally, another way to determine how much life insurance to purchase is to estimate potential costs in the future like college savings accounts for your children, paying off a mortgage, and any student loan obligations, with the total figure helping to determine the minimum amount of life insurance you need.
Once you’ve determined the amount of life insurance you need, it’s time to choose a policy. Generally speaking, the most common life insurance policies are known as term and whole. As the name implies, a term policy is valid for a specific number of years – typically 15, 20, or 30 – while a whole life policy is in effect for the duration of your life, assuming that you continue to pay the monthly or annual premium. Term life is generally less expensive because it only covers a specific time period, whereas whole life is more costly. However, keep in mind that whole life does offer several benefits, including an investment component that allows you to borrow against the policy premium if needed.
At Shavano Insurance Agency LLC in San Antonio, TX, we understand that choosing a life insurance policy can create a headache-inducing process. Consequently, our friendly professionals are always ready and willing to answer all your questions and simplify the process. Give us a call today to schedule an appointment.