It is time to buy a life insurance policy and you decided to go with a round number so you picked $500k or you actually jotted down and figured out how much your family needs. Either way, life insurance is not a complicated concept, it just has a lot of different questions such as what type of life insurance do you need, how much coverage do you want, and who will be your beneficiaries. Of course, taking into account your health and lifestyle. You found this article because you realized that you want to purchase life insurance to protect your family but aren’t quite sure how much life insurance coverage to buy or if $500k is enough life insurance coverage, but don’t worry because here at InsureChance we will help you decide whether or not $500k will be adequate to cover all your life insurance needs. For a quick summary check out the next excerpt, otherwise, read the whole article for a comprehensive knowledge.
- The first thing you need to determine is whether or not you want term life insurance or a permanent life insurance policy. You really can’t move on to the next step, your coverage amount, until you finish this step.
- You honestly can’t protect your family if you don’t know how much you need every month, it isn’t worth guessing. If you die and your family gets $500k what can they do with it? They may be able to invest that money and earn 5% which can amount to $25,000 a year in salary but if your family depends on more than $25,000 a year you need more coverage.
- To assess your coverage amount you should multiply your income by 10 and add on $100,000 per child for college expenses. Then you need to add a couple thousand for your funeral costs and like we mentioned earlier if you have savings you can deduct that from the amount you get after multiplying and adding.
- Both parents or both spouses should be insured because the value provided by you being a stay at home spouse or stay at home parent is valuable and all the things you do need to be replaced.
Term life vs Permanent life
The first step is, you need to determine is whether or not you want term life insurance or a permanent life insurance policy. You really can’t move on to the next step, your coverage amount, until you finish this step. Term life is a pure protection plan that will only cover you for a short time frame. Term life insurance is ideal for individuals who only need life insurance temporarily to fit their specific needs or don’t have a big enough budget for life insurance. Term life insurance is the cheapest life insurance type in the whole market which is why we said that if you’re on a tight income term life is for you.
Depending on which carrier you decide to buy a term policy you will be given choices of term lengths that you can remain covered for and they vary from 5, 10, 15, 20, 25, or 30-years. When your term policy expires you can choose to cancel the policy if you no longer need life insurance but keep in mind that if you choose to do this you will have to reapply whenever you do need life insurance again and you will not be given the same rate and quote as you receive this time because life insurance companies use your health, AGE, and lifestyle into consideration and those can change in a couple of years.
If you don’t cancel your term life policy it will automatically turn into an annually renewable policy which means that every year you choose to keep your policy you will be renewing your policy for another year but keep in mind that doing this will cause your premiums to increase every year! If your term came with a conversion option you can turn it into a whole or universal life plan.
Permanent life insurance has a couple different types of life insurance. Whole life is the first form of permanent coverage and is what most people hear about. This is the most simple of the kinds of permanent life insurances because it simply provides you with a death benefit and it even provides cash value as well as the other kinds. Universal life came after whole life and that’s why it offers a lot more flexibility and in many cases affordability. What we mean by flexibility is that you have the opportunity to change your premiums or coverage amount at any time of the policy because as you grow your needs will grow.
Is $500k enough coverage?
If $500k is enough coverage or not is something you have to figure out only because we are not aware of your debt and all the information necessary to come up with the coverage amount that best fits your situation. You honestly can’t protect your family if you don’t know how much you need every month, it isn’t worth guessing. If you die and your family gets $500k what can they do with it? They may be able to invest that money and earn 5% which can amount to $25,000 a year in salary but if your family depends on more than $25,000 a year you need more coverage.
We can tell you that half a million sometimes will work in your favor with life insurance companies simply because it’s the next band up from $250,000 This can be a bigger discount in the long run for you and if you want to dabble around with both coverage amounts so you can see yourself which company offers a better rate for half a million than a quarter million you can fill out our super easy quote engine below this article. If you still are debating whether or not $500k is enough coverage or not after reading this article you can feel free to contact us and we can walk you through the whole process so that we can figure this one out together.
Sample Rates for $500,000 30 Year Term Life Insurance
To give you an idea we will use both male and female clients at age 30 that are non smokers. As you will see females pay a bit less for life insurance than males due to a longer life expectancy.
Male 30 Year Old with Preferred Plus Health Class
Female 30 Year Old with Preferred Plus Health Class
How to find out your coverage amount
You should multiply your income by 10 and add on $100,000 per child for college expenses. Then you need to add a couple thousand for your funeral costs and like we mentioned earlier if you have savings you can deduct that from the amount you get after multiplying and adding.
*You can use our need analysis calculator to get a pretty precise idea of what amount of coverage to get.
Work With Us!
Now you should have a pretty good idea if a half a million dollars will be enough or if you need to get some more. The most important thing to do when shopping for life insurance is to work with an independent agency that provides quotes from all the top rated companies like Prudential, Banner, Metlife and many more. You see life insurance rates are fixed by the law so why wouldn’t you let all the companies compete for your business. This is also the reason why we offer no-obligation quotes from all the carrier in a matter of few mouse clicks right here on our site. Simply choose a product you’re most interested in and see who comes back with the best rate. So what are you waiting for, request an application or call us at 888.492.1967 and give yourself the peace of mind you deserve.