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Step 6 of 7: Hassle-Free Insurance Shopping

Step 6: How Much Coverage Is Needed—And Who Should Have It

Man standing with his two children.
Both wage-earners and homemakers need life insurance!

Getting the appropriate amount of coverage for the right members of your family or business is the most important part of your life insurance purchase.

Who needs life insurance?

At Home: Wage-Earner / Homemaker

Both wage-earners and homemakers contribute to a family’s financial well-being. Wage earners provide necessary financial support or income. Homemakers also provide value in the form of necessary household activities and the care and development of children.If a wage earner or homemaker were suddenly gone, the family would suffer financially. Therefore, both wage earners and homemakers should have life insurance coverage.

In Business: Key Employees / Owners

Many businesses use life insurance as a way to insure against the loss of a key employee, partner, or owner. If an employee’s death could affect the viability of a business (because of key knowledge, relationships, or skills they’d be taking with them), life insurance is a
good option. It gives a business time to replace what has been lost.

How to determine the right amount of coverage

Below are three common methods for determining the appropriate amount of coverage. 

8x15 Rule: Many industry professionals suggest coverage equaling 8 to 15 times your annual salary.
For example: Annual Salary ($50,000) X 10 = $500,000 in coverage

Monthly Needs: Another way to determine needs specific to your situation would be to consider your monthly needs and how long they are needed.
For example: Monthly Needs ($3,000) X 12 Months X 20 Years = $720,000 in coverage

Itemize Your Needs: Itemizing your needs takes into account all assets, liabilities, and future expenses. This method should provide the most accurate evaluation of
your needs.

  • Assets: List your assets and their current value. Your assets could include a house, savings, other investments, and other life insurance policies.
  • Liabilities: List your liabilities and their current value. Liabilities include any debt, home mortgage, or other expenses that need to be settled.
  • Future Expenses: List your future expenses. Remember to include funeral costs, medical expenses, education and tuition expenses for children, and spousal support.

Back to Step 5: The Basic Types of Insurance
Continue to Step 7: How Long Will This Process Take?

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For over 40 years, our company has helped half a million American families protect their future with life insurance. We provide fast, free quotes for life, disability, long-term care insurance, and more.

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*Comparison of each carrier’s best published rates for a
10-year level term policy, 30-year-old non-smoking female


^Represents 10-year level term life insurance rates for 40-year-old female,
in good health, no tobacco, residing in Ohio.

R. Jan Pinney CLU, ChFC is a licensed life insurance agent in all states and the District of Columbia. The following agent license numbers are provided for R. Jan Pinney as required by state law: CA agent #0440057, LA agent #291116, MA agent #1674866, MN agent #20270113, UT agent #58330, agent R. Jan Pinney, DBA Pinney Insurance Services. Commercial use by others is prohibited by law. This site provides term quotes. Each rate is a quote based on information provided by the carrier. No portion of Trusted Quote may be copied, published, faxed, mailed or distributed in any manner for any purpose without prior written authorization of the owner.

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