How Much Life Insurance Do I Need Starting Out?
If you work for the federal government, getting life insurance is a smart decision that helps safeguard the financial future of your loved ones. The question of “how much life insurance should I get?” can be daunting to answer. You can’t pinpoint the exact amount down to the penny, but you can get the right amount of coverage that will help protect the ones who matter most. Too little could leave them in a tough financial spot should something happen to you. Here’s an outline of things to consider when calculating how much life insurance you need as a federal employee;
Calculate Your Expenses
You need to have a clear understanding of what your situation is. Consider your monthly needs and ongoing costs your family could be left with. At this point, come up with a list that encompasses debt, utilities, education, rent or mortgage payoff, and food. When it comes to this crucial topic, guessing just won’t work. You can’t protect your family if you don’t have a clear picture of your current expenses and how much they would need to carry on without you. Take into account future expenses such as childcare and college costs. For instance, you could calculate the annual needs and multiply that by the number of years they need it.
Take Your Debts and Obligations into Account
If you have any outstanding debts, you probably don’t want them to fall on your loved ones. Add up your remaining debt including your credit card balances, mortgage or any other debt that you might have. Your life insurance needs will also be determined by the amount you add to your debt each month and the pay down frequency. You may have to buy more life insurance to cover these expenses.
Add Up Your Assets and Savings
If you put money away every month, that’s a security buffer for you and a well-informed move. Considering your monthly savings helps you understand whether you’ll have to replace your income partially or wholly. Calculate your assets, investments, real estate, bank accounts, and retirement accounts. Also, consider how much you’ll need for your retirement and immediate future. Without life insurance, these items may be liquidated to help cover expenses.
Calculate Needed Coverage with WAEPA’s FEGLI Calculator
The whole idea of understanding how much life insurance you should purchase is to determine how much your survivors will need when you’re not around. Now that you know your current and future needs for your loved ones, subtract the sum of your savings and assets from your total expenses. The resulting amount will help you have an insight into the amount of life insurance that you’ll need. We’ve also created a handy life insurance calculator for federal government employees. The calculator provides a quick and easy option for calculating an estimate based on your needs, expenses, and assets. Our calculators also help you to calculate your premiums for various FEGLI coverage. Check it out to get started and become a member of WAEPA.
This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.