we’re talking about how much life insurance do I need so typically the rule of thumb is 10 to 12 times your gross salary so say for example for easy numbers if you make a hundred grand a year you’re gonna need about 1 million to 1.2 million dollars in life insurance however there are many factors that go into this calculation so it makes sense to actually go through a life insurance calculator that I found online so without further ado let’s get right into that calculator so ultimately what we have here is how much money will be needed for certain things that come up during life depending on what age you pass away at so very quickly let me let me actually backtrack here
the reason I’m passionate about this is because I’ve seen in my own life whether it’s friends or family people have passed away prematurely and it’s left certain situations and certain families in a crappy situation to be honest with you obviously between all the grieving and all the stuff that just happens when someone passes away you know finances are going to be messed up if you’re not prepared for that death so I’m not making this video to be a debbie downer I’m making it because I’ve seen it and I’ve also sold insurance in the state of Ohio so shout out to I will tell anyone that’s trying to get into sales they have their financial representative role do not take that internship all they’re doing is trying to get your contacts and they’re pimping you out to sell whole life insurance what we’re gonna be talking about is term life insurance so whole life insurance is when you’re actually owning the policy but there’s so many different caveat that I’m not gonna go into on this video to where it’s essentially just a payday loan for the middle class versus term insurance where you’re actually renting the insurance so you’re paying every month you have no money going into it but god forbid when that event does happen when you eventually do pass away you will be covered through that term amount the rule of thumb is 10 to 12 times your actual gross income but there are little nuances that this calculator helps visualize
so let’s go through each one of these and pretend like we’re going through an actual scenario so how much money will be needed for burial expenses so
typically what I’ve seen the average is about eight to twelve thousand dollars depending on you know how high-end you want to go with the casket and the services and all that stuff there’s a lot of things that go into it I actually worked for a startup company called a funeral comm and we were actually bought out by a publicly traded company so a big shout out to Mike and Brian of a funeral I’ve called every single funeral home in Northeast Ohio and I know them all by name so I digress so how many years of income will you need to cover so let’s say for example you’re a new father let’s say you’re 35 years old okay and your your kids were just born let’s say they’re three and five years old so you need to cover let’s just say at least through college so let’s just call it a nice even number let’s say twenty years right your kids will be graduating at 23 and 25 years old so hopefully you know they’ll be making an income at that point in life so how much annual net income will your survivors need so for this example let’s just say we do make a hundred thousand dollars net right so now how much money do we have in savings and investments let’s say we have thirty thousand dollars liquid now we did say that we have two children so we have two children here one is three one is five years old and how much is needed for future college expenses per child let’s say a hundred thousand dollars for each kid I know I’m going kind of high here but who knows what college tuitions will be you know ten fifteen years from now now is there any one-time expense as you wish to fund let’s just say no and calculate so based on these inputs this calculator is coming up with roughly 1.6 million dollars so if we go back to that
original estimate of 10 to 12 times your net income you know we’re getting at right around 1/2 1.2 million dollars this is actually being a little bit more conservative so for this gentleman I would take out a policy that is right around 1.6 million dollars so the reason for that is because think about it if you passed away god forbid you have your spouse or your partner or whoever else is gonna raise those kids
you are basically acquiring your income that you would have made over that time span so we said 20 years right but you know we’re not accounting for saving it with interest and working on that compound interest that I always talk about so yes you can grow that nest egg but you’re really trying to compensate for your obviously passing away and your loss of an income for that family so again we mentioned $100,000 in this example so this person is gonna need right around 1.6 million dollars to cover their earning potential over those 20 years so this is a subject that no one really likes to talk about because everyone thinks that are gonna live forever but I’ve seen it in real life and it does happen to people and it freakin sucks but at the end of the day it’s nice to know how much you need to cover that way your spouse or your significant other and also the children that you’re leaving behind are raised properly or at least to the best of their ability and they get every
opportunity to succeed in life so thank you so much for watching this video like I said you guys I’m gonna keep these short and sweet value-packed
so please give it a thumbs up share this with a person who needs to realize that they do need insurance again go for term insurance not whole life thank you so much everybody check out my stock market course if you have not already I update that literally daily I provide nuggets of information and also my own personal portfolio thank you so much for
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