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How Do You Know If You Have Enough Life Insurance?

First, did you base either your term or whole life coverage amount on what you think your family’s expenses would be without you to depend on (example: dependents’ college tuition, remaining mortage payments, retirement and/or long-term care contributions for a spouse, outstanding auto payments, etc.)? If the answer is yes, it is important to also:

Assess your full earning potential. Why?
If there is a “delta” – a difference – between your career’s earning potential and your estimated expenses’ value, that is the gap you need to cover to keep your dependents “whole.”

How do we calculate your delta?
Here is an example: your expenses calculator may predict you will have expenses valued at $800,000. However, if your plan to work professionally until 65 years old at your current earning rate or slightly more, that figure is likely to be much more. In fact, about $2 million more for the average 35 year old in the DMV.

Without whole life insurance for the value of that delta, the risk to leave dependents “less than whole” still remains. Have questions about if “the delta” matters? Be sure to review your anticipated career earning potential and estimated expenses with your insurance and financial advisors.