Do you have sufficient life insurance?
Life insurance is one of the cornerstones of financial planning. Your life insurance needs will depend on your personal financial circumstances and goals. Many people purchase life insurance to help ensure that their loved ones will have the financial support they need in the event of their passing.
To help you decide on the right type of policy and coverage, here are three key questions to consider:
- What are your goals for your family?
- What is the annual income your family needs?
- What immediate expenses and future obligations do you want to cover?
Figuring out the proper amount of coverage can be complex. If you’re underinsured, you may not receive adequate protection. On the other hand, if you’re overinsured, you may end up paying too much in premiums. It’s a good idea to reach out to an insurance specialist or financial advisor to find an appropriately tailored life insurance policy.
While everyone’s coverage needs will be different, let’s go over four basic steps that could help you get started:
Step 1: Add up your immediate cash needs and compare them to your available cash resources.
Step 2: Understand your Social Security benefits. Keep in mind that Social Security is more than a retirement program. Your family members may receive survivors benefits if you pass away. If you are working and paying into Social Security, some of those taxes you pay are for survivors benefits. Your spouse, children, and parents could be eligible for benefits based on your earnings. For more information, visit the Survivors Benefits webpage or speak to your financial wellness coach.*
Step 3: Calculate the value of other income sources available to your beneficiaries, which could reduce your life insurance needs. This may include income from your spouse’s employment, savings, investment accounts and more.
Step 4: Estimate your family’s living expenses. Some costs may increase while others may go down after your passing.
Goldman Sachs Ayco Financial Wellness digital platform has additional insurance resources, including a calculator that allows you to ask “what if” and model different scenarios and outcomes.
