In a couple’s young years, money is typically tight but responsibility is huge: There are children to support, a mortgage that needs to be paid and debt that has accrued (Oftentimes college loans put extra pressure on either of the couple earning income). The loss of the principal bread – winner’s income would be devastating to a family’s functioning. Assessing proper life insurance need doesn’t have to be difficult. Since money is tight in a young couple’s life; you don’t want to over-insure nor do you want to be under insured. Hitting the target with a bullseye (the correct amount of life insurance) requires intentionality and discipline. (Because every budgetary line item counts, you’ll also want to leave room for the most underutilized insurance in America: disability income insurance).
DIME – Life Insurance Need analysis
While one can always use a fancy calculator on our website, understanding The DIME principal makes needs analysis simple and transferable:
D. DEBT (In the event of your premature death or your spouse’ would you want any debt paid off for your surviving spouse?)
I. INCOME (This is the most important of the 4 areas and 10x your current gross income is recommended)
M. MORTGAGE (In the event of your premature death’; would you want the mortgage paid off for your surviving spouse?)
E. EDUCATION (In the event of a premature death, would you want college education expenses paid off for your child(ren)?
Example… Joe and Mary have combined credit card and auto loan debt of (including car loans) of $30,000 (D)
Joe is the principal bread-winner and makes $50,000/year (gross) 50,000 x 10 = $500,000 (I)
They have $200,000 left on their mortgage (M). As a couple they decided that financing their children’s college education (either by loan or monthly installments to a . college fund) would not be practicable and will forgo this luxury.(E)
Calculation: $30,000 plus $500,000 plus $200,000 = $730,000 life insurance death benefit that Joe Needs
Although Mary does not earn income; the homemaker contributions she provides in raising their two children
is substantial. If she were to pass away before Joe then he would need to hire a nanny or pay for day care services for his young toddlers while he is away earning an income for the family. Because of this, it is recommended that Mary obtain a minimum of $100,000 in death benefit coverage.
We hope this example above, as well as prior explanation, simplifies this compelling coverage.
Feel free to visit our website, cInsure.org , and compare the computerized calculation to your own – utilizing the DIME Principal!