Selecting a life insurance plan is a big decision. You will need to think about many factors when planning for how much insurance you need.
A goal of this insurance is to provide your loved ones the financial coverage they need after you pass away. For many people, that means selecting a policy that is at least as much as your annual salary for several years. But, many people die with debt. What happens to that debt after your death? Your family may need to pay for it.
Who Handles Debt After Death?
Depending on your situation, your loved ones may be responsible for paying off your debt if you die suddenly. For example, any debt you have at your death may come from your estate. This includes items of value that you own. For married individuals, this means your spouse might need to pay the debt or sell assets to do so. That's not what you want to see happen. It does not have to be what happens.
You can buy life insurance to help with this cost. This policy can be in an amount that is high enough to pay off the debt you have. It can cover most of the risks your loved one may face at the time of your death.
How Much Debt Will You Have?
The hard decision is knowing what's enough? Life insurance plans are available in multiple amounts. You should choose what is affordable for you to pay for over the course of your life. But, you should also try to estimate your debt. Consider:
- Mortgage debt – how much is your home loan debt?
- Student loans (which may not have a requirement for repayment)
- Medical costs at the time of death
- Other types of debt you have
Then, factor in extra costs you wish to cover. This may include paying for your child's college education. It may include supporting a charity important to you.
By estimating debt after your death like this, you can feel confident in the type of policy you select. Select a life insurance plan that covers at least the amount of debt you have now. Then, over time, be sure you update your coverage. You can adjust your policy to match how much debt you have at any time during your life. Be sure this covers your needs each year.
Need an effective policy? Call Miller's Insurance Agency, Inc. at (610) 269-4500 for a fast, free West Chester life insurance quote.