Life insurance isn’t everyone’s favorite topic; after all, it feels strange to plan for after your death. But like any other financial decision, planning for your dependents is a wise idea. You may be saying to yourself, “I’m young and healthy. Do I really need life insurance?”
Here’s how to decide what’s best for you and your family. If anyone you know relies on you financially, it’s a smart idea to consider life insurance – whether it’s children, an aging parent or a spouse. Life insurance will ensure your beneficiaries can maintain your standard of living.
How much life insurance do I really need?
The first step is to evaluate your financial situation and household needs. Housing is a big factor to consider because housing costs are usually the biggest portion of a monthly budget. If you currently own a home and have a mortgage, having enough coverage to own your home outright can help your family maintain stability. Or, if you’re renting, consider having several years of rent covered.
If you’re single and don’t have any dependents, housing may not be a necessary consideration. But even as a single person, you’ll still want to be sure that you have enough life insurance and savings to cover your personal debts, any outstanding medical bills and the cost of funeral expenses.
It’s a common view that only the breadwinner of the household needs life insurance. This definitely isn’t the case! If you’re a stay-at-home parent or have one in your household, consider the costs of full-time childcare, cleaning, cooking and other household activities that your household will need to run efficiently.
I have life insurance from my employer. Is that enough?
The amount of life insurance you need is different for everyone, because it depends on how much you debt you have, how much you have in savings, and your lifestyle and spending choices. A financial advisor can help you find a figure that you’re comfortable with.
Having life insurance through your employer is a great benefit, but typically the payout is about twice your annual salary. If you make $50,000 per year, this would amount to $100,000 upon your death. This sounds like a lot, but if you have large amounts of outstanding debt, say $5,000 in credit card bills, $200,000 left to pay on your mortgage and children that want to attend college, your employer benefit might not be enough. Consider this as well – what happens to this coverage if you ever leave your job? It’s lost. A workplace life insurance policy doesn’t travel with you after your employment ends, so it may make sense for you to consider additional private coverage.
How would I go about learning more about what options are right for me?
Navy Federal Financial Group (NFFG), a subsidiary of Navy Federal recently released a new site to address these concerns for the on-the-go lifestyles of military servicemembers and their families. There’s separate tracks for both military servicemembers and civilians so you can find information that meets your family’s needs. You can always speak to an advisor to get more information, but if you prefer to educate yourself on your own time, NFFG’s Life Insurance site is here to help.
Nondeposit investment and insurance products are offered through Navy Federal Financial Group, LLC, (NFFG), and through its subsidiaries, Navy Federal Brokerage Services, LLC (NFBS), a member FINRA/SIPC, and Navy Federal Asset Management, LLC (NFAM), an SEC Registered Investment Advisory Firm. These products are not NCUA/NCUSIF or otherwise federally insured, are not guaranteed or obligations of the credit union, are not offered, recommended, sanctioned, or encouraged by the Federal Government, and may involve investment risk, including possible loss of principal. Products may be offered by an employee who serves both functions of accepting member deposits and selling nondeposit investment and insurance products. 1-877-221-8108.