If a Family wage-earner dies, how much cash will be needed?
Final Expense Estimates are good tools for anyone who is looking to purchase life insurance. Usually it’s the surviving family member’s responsibility to take care of them. Not having life insurance leaves your loved ones with a mountain of debt and no way to cover these expenses.
It is important to figure out the amount that will be necessary to cover the costs after passing. The following are points to take into consideration when estimating how much may be needed:
When it comes to Life Insurance, most people are underinsured.
Assets and Debts
If you were to pass away, friends and family are going to be responsible for all of your outstanding debts and any funeral expenses thus it is important to make sure that your life insurance plan is large enough to pay off those bills without draining your family’s bank account.
Annual income
Most insurance professionals suggest getting around seven to ten times your annual income.
Future Expenses
It is necessary to think about future expenses that your family will run into.
An appropriate amount of life insurance guarantees that the necessary amount will be paid to the family swiftly, outside of probate and with only minimal administrative requirements.
Below is a list of possible list of expenses that may apply.
Use this summary or the attached sheet to estimate your final expenses. Bear in mind that Social Security provides a lump sum of only $255; this “benefit” is payable only to an eligible surviving spouse or child.
FINAL EXPENSE ESTIMATE
To cover the costs of health care (not covered by insurance)
- hospital?
- doctor?
- medicines?
- other?
To cover burial expenses:
- funeral?
- religious services?
- cemetery lot?
- grave marker?
- funeral luncheon?
- other?
To cover personal obligations:
- mortgage?
- household bills?
- installment payments?
- loans?
- unpaid pledges and liens?
- other?
To cover estate administration costs and fees:
- court fees?
- legal fees?
- accountant, appraiser and other expert fees?
- other?
To cover taxes:
- estate taxes?
- inheritance taxes?
- income taxes?
- property taxes?
- other?
* Rule of Thumb: Typically, half of the annual family income should suffice; however, each individual circumstance must be reviewed in some detail.
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