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How Much Life Insurance Should You Have?



This article is published in collaboration with Scutify, where you can find real-time markets and stock commentary from Robert Marcin, Cody Willard and others. Download the Scutify iOS App, the Scutify Android App or visit

Most people are aware of the function of life insurance: it is a contract you enter into with a financial institution, most often an insurance company, to pay out a predetermined cash amount to a designated beneficiary, or beneficiaries, at the time of your demise. The purpose of legitimate life insurance policies is to give you the assurance that those you most care about will be provided for financially after you can no longer look after them yourself. But it's a sad fact that many people nowadays procrastinate initiating a life insurance contract, or never bother to do it at all. These people are not really selfish or lazy -- they just don't 'get it' when it comes to the vital importance of good coverage.

In 2016 a national financial insuring association discovered that nearly a third of households in the United States lacked any significant life insurance protection. Their research also uncovered the fact that nearly half of those polled felt the need to upgrade their insurance coverage. To insurance companies and their agents, this is a crying shame.

It is an axiom that the majority of people in the United States have some kind of recognition that life insurance should be an important part of their financial portfolio -- and a big reason they don't follow through on what they know to be true is because of lack of full trust in the insurance industry and the rates they apply to individual policy owners. Most insurers and their agents invoke the basic rules of financial planning when selling to a customer -- that is, you should purchase enough life insurance to bring about five to ten times your yearly savings to your beneficiary. This approach, however, is not viewed with a great deal of confidence by the general public anymore.

A lot of CPA's and CFP's think that this form of oversimplified calculating does not really serve the needs of most insurance clients today. It's not very effective. When purchasing a life insurance policy, the vital question is just how much your family or other designated heirs will realistically need when you are gone -- and not how much you would like to see them get. An insurance payment should be just one part of a diversified portfolio of financial assets that can be accessed after your demise -- such things as property, stocks and bonds, bank deposits, and cash on hand.

What this means is that a person considering life insurance should first scrutinize their current financial status and the status of those dependent on him or her, before deciding on the amount of life insurance to purchase. Life insurance should never be a stand-alone item, divorced from the other financial plans of an individual or a family. It must be integrated into the big picture, financially speaking.

To put it all in perspective, when your finances are properly planned out, usually with the help of a financial expert such as a Ty Stewart from, you will be in possession of a unbiased tool for calculating basic and beneficial financial formulas for your own welfare, and the welfare of those you need to take care of, or have decided to take care of. With today's advanced algorithms, it's a piece of cake to figure out your financial liabilities and assets in a matter of minutes, and to continuously update these calculations through the years to adjust something like a life insurance policy to make sure it will always be an appropriate monetary instrument for your wants and needs.

This article was written by Adam Monson for on .

This article published in collaboration with Scutify, the best app for traders and investors. Download the Scutify iOS App, the Scutify Android App or visit

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