This week I went to Reddit to see what people were talking about. I came across quite a few questions from users that had to do with life insurance.
Here are some of the interesting search results I found:
• Married men with young kids and a wife: How much life insurance have you got?
• Did I goof this up: I got whole life insurance for the kids as a way to save up for college. More details inside.
• If you’re married & have kid(s) then GET LIFE INSURANCE NOW. No excuses.
At the root of these search results is one central question: How much life insurance do I need?
There are several ways to take on this overwhelming question. One tried-and-true way is to break things down into smaller blocks and make them easier to handle is D.I.M.E
D.I.M.E stands for debt, income, mortgage, and expenses, and it simply provides an outline for us to talk about what we want our life policy to do for us.
The father above identifies as married with children. Let’s assume he has two for this example. Most of us would want to help both of our kids to go to college, so let’s assume he is the same. If we look at the University of Oregon and some online information we can see following figures :
Annually, in-state cost of attendance is $27,502, and out-of-state cost of attendance is $50,542. That brings our total for two children attending U of O for four years to $220,016. This does not consider any increase in tuition from today until the children step on campus for day one.
Write that down: education $220,016
The average salary in Portland, Oregon is $55,405 . How many years of income would you want to replace if you died today? We assumed above that our family had two children, likely of different ages. Let’s use the age of my kids as an example: they are 9 and 15. So how much income would we want to set aside? Let’s assume we want to provide support until both children are at least 18. That means we need 9 years of income replaced, so take 9 times $55,405.
Write this down: $498,645 – income replacement.
Now we need to consider where the family lives. Let’s assume our father of 2 and his wife live in a home in North Portland. They bought a modest-sized $350,000 1930s bungalow in 2006 and put 20% down and financed $280,000. They have been in the home for some time and now owe $250,000.
Here’s our family’s grand total to keep the surviving spouse and children in the home, maintain the same lifestyle, and allow the children to go to college without heavy student debt following them to adulthood: $968,661.
The last item to consider is inflation. To make things simple we could simply turn the $968,661 into 1.5 million dollars.
Many people get overwhelmed when thinking about leaving their spouse and children behind, and that is totally understandable! There’s a lot to consider when making life insurance decisions –how much can you qualify for? How much can you afford?
That’s where I come in – it’s my job and passion to make this an easier process for you. I have the experience and resources to make sure you get the right portfolio for your unique situation and needs. The best policy is the one that’s there when you need it, big or small.
I am happy to help you understand your coverage, whether you have it through work, another company, or none at all!
Call my office today, 971-303-8508.