When Should You Purchase Life Insurance?

Most people believe in purchasing Life Insurance as they start families or reach the age of 40.  Most people do not know enough about Life Insurance, such as how much your family should have or do I need a lot now and not nearly as much when I retire?

Let me give you an easy way to calculate the correct amount of Life Insurance.  Simply stated, multiply your takehome income by the number of pay periods in any given year, then multiple that number by the number years it would take to reach 70 years of age.   As an example lets use a family of five with the Mom and Dad at age 40 making approximately $30,000 takehome for the him and her individually totaling $60,000 per year.

At 3.5% interest for safty reasons, how much would you need to put into a guaranteed savings program to live off of the interest with inflation without taking more than 3.5% of the principle yearly to cover inflation.

Simply said in round numbers, if you were 40 years of age you would need to have a minimum of $900,000 worth of life insurance on each of you to make it to retirement with moderate inflation of about 3.5% per year to raise your children, pay of your home, provide a college education for them and the same quality of life you have today.

One of the areas I see a lot that troubles me is when it comes to Life Insurance is that the stay at-home Mom is not covered properly.  If you have small children and you work one or two jobs to produce the income necessary to support your family, what would it cost to hire someone to raise your children?

Well, a good full-time Nanny and housekeeper will cost you a minimum of $30,000 per year with room and board.  Please don't take your wife for granted, she does work and replacing her with payments to raise your children can have a devasting effect on your cash flow.

Getting the right amount of Life Insurance is important to your families future, don't make a mistake by buying the wrong amount of insurance, or overpay for it.  Give us at call and one of our professional agents help you and your family through this confusing time.

M. Robert Smithers
Chief Executive Officer
Wisconsin Insurance Solutions, LLC
3350 Commodity Lane, Suite "C"
Green Bay, WI 54304

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