Life insurance is an essential product for family protection, priced, increasingly more accessible but that continues to be an important expenditure for families. For this reason, many times there is a temptation to have small, insufficient coverage in the case of needing cash it. This is especially important if you have debts, especially a mortgage, that may be impossible to pay the income that the family unit following the death of one of its members. On the opposite side is having a capital secured very on top of what we need, that will pay significant despite being a completely unknown risk.
That is why it is very important to analyze the amount which should cover our insurance so that it perfectly performs its function of protection without being a burden for our pockets, although the work is not easy- life insurance.
If we cover such a good like a car, a house or any good, we do it on a known and estimated value. Life insurance is not as direct. There is a more direct coverage part estimate, which corresponds to the hypothetical household debts, but there is another, the most important in the majority of cases in which there is to consider other variables:
1- If you have a mortgage: in theory, must cover the capital outstanding that ours but adapting it to the actual payment of the same. For example, if the salary of one is 80% of the family income, we must raise the percentage of total debt that we cover with life insurance up to percentage.
2- Margin according to the salary of the insured: in addition to cover all debts, must increase capital by a higher amount. Following the death of a family member that provides income, many of the costs are kept and others barely diminished by what develops an imbalance between revenue and expenditure. To fix this, you need so much time to reorient expenses, trying to adjust them downward to try to increase revenue. Until this happens it is recommended that the insurance covers a minimum of 2 or 3 years of revenues, if we can up to 5 years.
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3- Specific family needs: the amount that we ensure is not a fixed amount. One of the expenses that they change over time is the protection and well-being of children, especially in the safeguarding of their studies. For example, if they will face higher or post-graduate studies. Increase the coverage of life insurance is cheaper to do it with a specific insurance for studies.
4- Adjusting the risk to every Member of the family unit: there are many cases in which life insurance one of the members of the family only has it, it is a clear mistake. If the couple, the two members work and bring his salary to cover costs should each buy your life insurance with a coverage that followed as specified above.