If you were to die unexpectedly, would anyone in your life be financially impacted? If the answer is yes, you might want to consider a life insurance policy. Final expenses, including the cost of a burial or cremation, can cost a family upwards of $10,000. Many people dedicate a portion of a life insurance payout to covering these costs. Some other common uses for a life insurance payout include:
- Paying off debts
- Making mortgage payments
- Paying funeral costs
- Setting up an inheritance
- Paying estate taxes
- Paying medical bills
- Maintaining a certain standard of living
Life Insurance Policy Options
How Much Coverage Do I Need?
You can purchase a life insurance policy with a payout as small as a few hundred dollars and as large as a few million dollars. How much life insurance you should buy depends on what financial burdens your loved ones will have once you’re gone, as well as how much you can afford in monthly premiums.
Financial professionals will often recommend purchasing a policy for eight to 10 times your annual income, but the exact amount you need depends on several different factors, including your current savings and total outstanding debts.