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How Much is too Much Insurance?

Life Insurance

If you were to pass away tomorrow, would your loved ones be financially stable? Although it’s not an idea that many like to think about, answering this question is an important step in family planning. There is one way to ensure the continued financial safety of your family after you pass: life insurance.

Taking out a life insurance policy could help ease your mind about these worries. Not only will it help your family be prepared in case of your untimely death, but it will also provide a financial solution for years to come afterwards. Find out more about life insurance and how to determine the right coverage for you.

About Life Insurance

Taking out a life insurance policy involves an agreement between you and your Denver insurance company. For the term of the agreement, you agree to pay a premium for the policy and the company agrees to pay a certain amount after your death. Provided the premiums are consistently paid and the policy is up to date, your loved ones will receive financial stability, protection, and peace of mind in the years following your passing.

There are a few different categories of life insurance you can choose to fit your needs. These include whole and term life insurance. While some policies allow for cash value investment, others may pay out within an allotted time period. Others may require you to undergo a medical examination to ensure you are in good health, while some policies only require simple renewals. Take time to discuss all options with your Denver insurance provider so you choose the policy that makes sense for your situation.

How Much Insurance is Right for You?

The right amount of life insurance coverage depends on your current financial situation and there are a few ways to calculate it:

  • Take out a policy that is up to 10 times your annual salary amount
  • Multiply your salary by the amount of years you have left until retirement
  • Multiply the yearly amount your family needs to maintain their current standard of living by 20

Regardless of the numbers, it is essential to provide financial security for your family at this time. Typically, your family members should be able to make a five percent withdrawal every year from the life insurance death benefit — enough for them to live safely and securely for years to come.

Although these numbers may seem big, holding a life insurance policy is very cost-effective and affordable no matter your age. A typical one million dollar insurance policy will cost:

  • $1.15 per day for a 10-year Term Life Insurance Policy held by a healthy 40-year-old
  • $2.58 per day for a 10-year Term Life Insurance Policy held by a healthy 45-year-old
  • $2.93 per day for a 10-year Term Life Insurance Policy held by a healthy 50-year-old

To pursue a confident foundation in financial planning and protection for your family, consider an affordable life insurance policy. Contact your local Denver insurance agency to discuss these options and more.

Mountain Insurance

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