How Much of Which Type of Life Insurance do I Need?

Hi everybody, I'm here hiking in the Born Lake area of Idaho and just facing my last big task of the day, which is getting up that gully that's right over the top of my hat there. Hopefully that goes well. Watch the video here.

Determining the Right Amount of Life Insurance for Your Needs

Talk to you real quick about another question that you might not be asking that you should ask, and it's about life insurance. Now, you probably have life insurance or have at least thought about life insurance, but the question is: how much life insurance do you actually need and what kind of life insurance?

In order to know how much you need, you really need to think about what you want to accomplish with the insurance. Do you want to replace your salary for your dependents for the rest of your earning life? Or do you just want to pay for college for the kids? Or do you just need a few years so that the littlest kids could get in school and your spouse could work?

You need to figure that out so that you can then extrapolate that and figure out how much insurance you need to cover that need — to make sure that if you were to pass away, your dependents would have the situation that you would want them to have.

Choosing Between Term and Permanent Life Insurance

The second part of that is: which type of insurance? I talk elsewhere about term insurance versus permanent insurance, but just know that if you get permanent insurance, you're getting more than just life insurance.

This is whole life or variable universal life — you're also getting investments and tax deferral. You end up paying for those things, and that may be good, that may be bad — it depends on your situation. But you want to be aware of what it is you're paying for and see if it's what you really need.

Also, know that permanent insurance is much more expensive than term insurance. So, to get the coverage that you need, it may make more sense to get term insurance so that you can actually cover that big need instead of just getting a little bit of insurance.

Thanks for listening. I'm gonna head up this gully and hope that I don't need my life insurance.