Most people need enough life insurance to replace their income for the years their family depends on it, pay off major debts, and fund goals like college, minus savings and existing coverage. A needs-based calculation is more accurate than a simple multiple of salary. A fee-only insurance review in Chattanooga looks at your policies without a commission attached to the answer.
Add up what your family would need:
Then subtract existing savings, investments and current coverage. The gap is roughly how much new coverage to consider.
Rules like "ten times salary" ignore how many years of support are needed, existing assets and a spouse's income. Two families with the same salary can need very different amounts.
Term insurance covers a set period at the lowest cost and fits most income-replacement needs. Permanent insurance has a cash value component and can fit specific estate or business needs, but it costs significantly more. The right answer depends on the purpose of the coverage.
Group life insurance through work is helpful but usually ends or shrinks when you leave the job. Relying on it alone can leave a gap at exactly the wrong time.
Review coverage after marriage, a new child, a home purchase, a large raise, or when children become independent. Many people find they are over- or under-insured once they run the numbers.
A parent earning $90,000 after tax wants to replace income for 15 years, pay off a $250,000 mortgage and set aside $100,000 for college. Need: about $1.35 million in income replacement plus $350,000 for debt and education, or $1.7 million. If the family has $200,000 in savings and $150,000 of group coverage, the remaining gap is about $1.35 million. Adjusting for a spouse's income and expected investment growth refines the number further.
When the person sizing your coverage also earns a commission on the policy, there can be pressure toward more coverage or costlier policy types. A fee-only review looks at what you already own, whether it still fits, and what, if anything, is missing.
Sometimes, but a needs-based calculation that includes years of support, debts, goals and existing assets is more reliable.
Usually yes. Replacing childcare and household work has real cost if a stay-at-home parent dies.
It depends on whether anyone still relies on your income or whether coverage serves an estate planning purpose.
Want an unbiased look at your coverage? Request a fee-only insurance review in Chattanooga.
This article is for educational purposes only and is not individualized investment, tax or legal advice. Talk with a qualified professional about your specific situation.
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