Give the Gift of Life Insurance

Christmas will be here soon and chances are you are still struggling to find that perfect gift for the person on your list that is hard to buy for. This year, consider thinking a little bit outside the box and giving a gift most people need without even realizing it; life insurance.

Anyone that is responsible for people other than themselves should have life insurance. And even those without these responsibilities should have a certain level of coverage for burial expenses and cleaning up other debts. But despite the need, most people either have no life insurance, have far less coverage than they need, or the insurance they do have is through their job and therefore contingent upon remaining employed.

How Much Life Insurance Should I Buy: The amount of life insurance you should buy will always depend on the individual circumstances of the person you are buying it for. Here is an example:

Let’s say you are looking into a policy for your adult son who has very little insurance of his own. In this scenario, your child is married with two kids ages 11 and 13, owns a home with a $150,000 in combined mortgage and other debt. The goal will be to provide a sufficient level of coverage for your son’s family to maintain their standard of living in the event of a worst-case scenario. To begin, we would calculate the following:

• His Annual Income
• Current Debt (including the home)
• Number of Years Until the Last Child Turns 18
• Estimated Cost of College for Children (Optional)

Once we know all this (or have a pretty close estimate), we would take his annual income (in this example we will say $50,000) and multiply it by the number of years until the 11 year old reaches college, which is 7. $50,000 X 7 = $350,000. Now we will add this figure to the current outstanding debt: $350,000 + $150,000 = $500,000. If the kids already have a well-funded college account, you may not need to add college expenses to the calculation. Assuming that is the case, the amount of coverage needed would be $500,000.

How Much Does Life Insurance Cost: The cost of a life insurance policy varies depending on the age and health of the individual and the type of insurance product you choose to buy. If you have the financial means, a whole life policy is better because it is permanent and remains for life as long as the premiums are paid. It also gains cash value over time and can be borrowed against in case of emergency. The average monthly cost of a typical whole life policy for a 35 year old healthy male can be anywhere from $350 to $400 (or more) per month.

If you are on a budget and cannot afford this type of payment, term life insurance is a good option as well. In the above scenario, you would want the term of the policy to be at least 7 years until the last child is in college. A 10 year term life policy for a healthy 35 year old male is much more affordable at only around $30 to $40 per month.

Life insurance is not a tangible gift that your loved one can enjoy immediately, but their beneficiaries will certainly be thankful for it if it is ever needed. To find the best life insurance product to give that special person in your life, speak with a Maryland insurance broker that has access to several highly rated carriers in the state. There is a good chance they can find a policy that will fit your needs and stay within your budget.