How Much Insurance Do I need

When you build a house, you need a good foundation to protect you from range of circumstances. Insurance protection does the same. It is the “foundation” of the plan. Do we protect what we have built for those we love?

In financial planning, we divide risk management into several main areas: property and casualty insurance, liability insurance, medical insurance, disability insurance, life insurance and long-term care insurance. Which type of insurance would fit best with your budget?

Most of us walk the tightrope when we don't do our financial planning. Our loved ones are the ones climbing on our back while we walk this tightrope. And they trust us enough to follow us on this journey of life with its uncertainty.

 On the issue of risk management, the dilemma is: “How much life insurance do I need? What kind of insurance should I purchase?”

To determine how much is enough is easy. What would you want for your surviving spouse and children to have if you were not there? A good rule of the thumb is that your coverage should be equal to five to seven times your annual household income. Another guideline is that you should have death benefit equal to 10 times annual earnings.

Similarly, to determine what type of insurance to purchase, you have to begin by looking at your cash flow. How much money would you dedicate to this goal? The priority is to get coverage and the peace of mind that goes with it. Secondly, look at which type of insurance would fit best with your budget, depending on your cash flow.

Finally, have you ever wondered how a hot air balloon reaches its destination? At different altitudes, the wind current changes, thus effecting which direction the balloon flies. Skilled ballooners know this and release the burner at just the right time without procrastination so that it does not drift dangerously off course.

Just like our goals for our loved ones, we need to stop putting off what needs to be done to protect our family and our life's goals. Stop walking the tightrope and build that foundation. Indeed, insurance is the foundation your family needs.