March / 2010

by: Sara Peak

How much insurance do you need?

Choosing life insurance can be an emotional and difficult decision. Here are some things to consider when deciding how much life insurance you need:

• What other sources of income (if any) can your family rely on if you die (i.e., Social Security benefits, the surviving spouse’s income, or income from investments)?

• What expenses will your family incur? At the death of one spouse, some expenses might decrease. There might be no need for a second vehicle, or taxes might decrease with an elimination of a salary. Other expenses might increase, such as day care or health insurance if it was previously provided through the deceased worker. So try to create a future-needs budget as if only one spouse is alive.

• What future goals do you want proceeds of life insurance to cover, such as to fund your spouse’s retirement or children’s education?

• How near are you to retirement and what current assets have you accumulated for this goal? Consider whether the surviving spouse would need time off from work or additional training to re-enter the workforce.

CORRECTION: The $250 cost-of-living check for Social Security recipients listed in Kentucky Living’s January “Smart Money” column is a proposal and is not final.

Sara Peak is a freelance writer with expertise in finance and wealth management. Have a money question? E-mail us at