According to Schlesinger, there are five danger zones where the average consumer can get trapped. We’ll cover two of them in this article.
When trying to decide how much life insurance to buy, most people pick a number out of the air…maybe it’s their home mortgage, maybe it’s their annual salary, maybe it’s a total guess. But what you need to know first, according to Schlesinger, is how much you spend every month. Once you figure that out, find an insurance calculator online to help you determine how you want to take care of your family. Do you want a stay-at-home spouse to remain at home? Do you want them to remain in the same home? Answering these questions is critical to determining how much life insurance you need.
“Many people buy insurance—or don’t buy it—and then forget all about it. That’s a mistake,” says Schlesinger. Here are some of the questions Schlesinger encourages you to ask yourself:
Her recommendation is that you take a quick peek at your insurance picture once a year—just after tax time—and make it part of your annual financial review. Then contact your agent if something has changed. Good advice.
Next installment: How to Shop for Insurance
Article based upon: Schlesinger, J. The Dumb Things Smart People Do With Their Money. (2019) New York: Ballatine Books.