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For example, if I'm a young college student with no car, living at home, and without many possessions, my only insurance expenses are health and life policies (assuming Parent's aren't covering those too). But as a Father, homeowner, family, business owner, and husband, my insurance needs are going to be quite a bit more costly. Even in a situation where there are several exact people like me, our insurance needs will differ, based on the homes, cars we drive, amounts of life insurance we want, our health situations, credit ratings, etc. My percentage could be much higher than yours, and certainly much lower than the one the struggling minimum wage college student would be paying, if we were to compare incomes and expenses.
So it really boils down to what your needs are, what you can safely afford to spend, and how much coverage you can get on the amount you are willing to spend. The best advice I can give you is to meet with an agent or agents, and look at the different options available to you. I really hope that helps you, and thank you for asking!
The following is designed to cover necessary expenses if you should pass unexpectedly. The below approach is not for tax free asset transfer to your children, or tax free retirement. If you are lucky enough to be in that position, it's a whole different conversation....
Like most of us,you are on a budget, so to keep premiums that match expenses, I take my clients through a "layering" approach. For instance, if you need to get your children through college, once they have graduated, you no longer have that need. So instead of buying one lump policy you might get a smaller shorter term policy for college, a second longer term policy through your home getting paid off, and a third whole life policy that takes care of final expenses. As the expenses drop off, let the term policy that covered that expense lapse. Then work your budget backward.
If you think you can't afford it, think of what would happen to your family if you didn't carve it out of your budget. This year I was a judge for an scholarship essay contest for high school kids who had been affected by lack of life insurance purchased by their parents. There were some 37 gut wrenching stories of broken homes, foreclosed houses. In one case, it had gotten so bad at the foster family, the child was witness to a murder of passion. If you don't want that for your family, get started NOW!
As far as what percentage of your income should go towards your policy it will depend on what you are earning. For people who earn less than $25,000 a year it can be hard to maintain a policy with a $100 a month premium. If you earn $100,000 a year a $500 a month payment for insurance is not unreasonable.
Typically if you can keep your payments at 5% or less of your income it should be affordable.
Contact an Insurance Advisor for quotes.
However, unless you are extremely wealthy or you have a very specific need for it, I rarely believe that whole life insurance is the best option for clients. Only after fully contributing to your 401K, Roth IRA or non deductible IRA, saving for any childrens 529 account, paying down your mortgage, and successfully creating both an emergency and short term savings fund, would I even explore the option of buying a whole life policy.
A level term life policy is simple affordable option that can be purchased easily.