Exactly how much death benefit should I apply for on my life insurance policy?
Do I need a million dollar policy or will a $250K one suffice?
These questions can be difficult to answer for the people who are not trained in financial areas. Unfortunately, the answer to this question can have very serious and expensive consequences. Purchasing a million dollar policy when you only need a $250K policy means that over the lifetime of your life insurance policy you will likely end up paying thousands—if not tens of thousands—more than you really needed to.
However, the converse choice—electing a $250K policy when you really need a million dollar one—is just as financially disastrous. While doing so might save you from spending thousands of extra dollars in life insurance premium, this choice leaves your beneficiaries without the necessary financial means in the event of your death.
At Colva Insurance Services, we’ll do all this analysis for you. Colva utilizes an Asset-Liability Management (ALM) approach acquired through years of financial modeling experience with insurance companies and asset management divisions to model your assets and liabilities over time and identify gaps in your financial plans. We’ll then provide a life insurance solution that fills these gaps while minimizing the premiums you pay for this coverage. This analysis is geared towards saving you thousands, or even tens of thousands of dollars, in insurance premiums while still providing the life insurance coverage you need.
Here are some key criteria we’ll look at when making a recommendation as to how much life insurance you need:
- Current Assets and Liabilities: How much have you already saved for beneficiary expenses through financial vehicles such as college and retirement accounts? What debts do you currently have that would prevent you from providing the necessary support to your Beneficiaries?
- Beneficiary Needs: What are your Beneficiaries’ current sources of income and how much additional financial support would they need in the event of your death?