Homeowners, drivers and other individuals in the marketplace for insurance, have a host of factors to consider to make sure they are appropriately covered in the event of a death, accident, or other untimely event, advisors shared in interviews with VettaFi.
In some cases, standard insurance policies don’t cut it. However, there are other provisions that can help. They ensure individuals, or their remaining family members, aren’t left with hefty financial burdens on top of everything else.
Kenneth Chavis IV is a senior wealth counselor at Versant Capital Management. He recommends that individuals should generally “have enough life insurance so it does cover the debts that you owe.” That way, they do not become a burden to a partner or other family member.
“And if you’re the primary income earner, that amount after the debts that you have, can replace income for your family,” Chavis added.
“Let’s say, after all your debts, your family’s expenses are $40,000 a year. After all of your debts are paid, you’d want around $1 million left. You’d want enough to cover your debts and enough proceeds that can maintain your family’s lifestyle. It’s the 4% rule. If you have $1 million, you can take $40,000 a year and adjust for inflation and spread that out over multiple decades,” he explained.
Lindy Venustus, CEO and founder of Create Financial Planning, said that for individuals who don’t have dependents or a spouse or partner, they should still consider, “the people or organizations that you care about, and how they could suffer if you weren’t there.”