How much life insurance should I get?
The answer to this question depends on whether you want to deplete the life insurance death benefit or preserve it for future use.
Preserve the death benefit
Let’s say you make $50,000 a year and decide on life insurance of 20 times your income, which is $1,000,000.
Under the capital preservation method, the insurance money will produce $10,000 a year if it earns 1%. If the money earns 2%, then the money produces $20,000 a year. Higher interest rate produce greater income and lower interest rates produce lower income. At the end of a set period of time, which you can control, the original, intact death benefit can be paid out to your loved ones.
Deplete the death benefit
Under the depletion method, the death benefit amount is usually lower because it is not needed to generate income. The receipt of this one-time cash payment can be used immediately to pay-off debts and invested if desired.
In general, different people will have different death benefit needs. The amount of insurance can be express as a multiple of income which can be between 10 and 25 times your salary.
Can I get life insurance if I don’t have income?
Normally, income is required to obtain life insurance coverage. However, there are often many times when a person does not have income but needs life insurance. Fortunately, if you qualify based on the companies underwriting requirement, you can obtain term life insurance even if you do not work and don’t have any income.
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