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How much is enough?

Posted May 21, 2014 in Advice Column, Boone

If you’re like most Americans, you may have some life insurance coverage. But is some life insurance enough life insurance?

Experts recommend coverage equal to 10 times your annual income. If you earn $35,000 a year, your estimated life insurance coverage need is $350,000. That may seem like a lot of money at first, but think of it this way: your income provides for essentials — home, car(s), food, clothing, healthcare, retirement savings, paying off loans — and non-essentials like entertainment and travel.

Consider what would happen if your income suddenly stopped in the case of your unexpected death? How would your family meet these ongoing financial needs?

The financial strain from the loss of your income shouldn’t have to add to the stress your family would face in the event of your death. Life insurance helps ensure the people you care about will be provided for financially.

We all know that a healthy lifestyle lowers your risk for health concerns, but it may also lower your insurance premiums. Factors that could affect your life insurance rates:

•    General health. Don’t wait until you have a serious illness to apply for life insurance. Serious conditions like cancer can be a strike against you when purchasing life insurance. Medical conditions like asthma or high blood pressure may not affect your rates if being properly treated.

•    Weight. Obesity is a contributing factor to many health conditions. Because of this connection, many insurers take your body weight into consideration when applying for life insurance.

•    Family medical history. Family history can be a predictor of future medical concerns, but won’t prohibit you from getting the best rate, especially if you are eligible for preferred rates based on age, gender, weight and general health.

•    Smoking habits. Smokers pay higher premiums for life insurance than non-smokers for obvious reasons. The best way to lower your rates is to quit smoking altogether.

•    Hobbies. Thrill-seekers and extreme sports enthusiasts may pay higher premiums. These are hobbies such as mountain climbing, scuba diving or flying planes, for example.

•    Age and gender. Youth has its advantages of lower life insurance rates. It’s possible to purchase life insurance later in life. However, depending on your age and general health, the cost may be prohibitive.

Keep in mind that all criteria are considered when factoring insurance rates. Determining how much life insurance is enough depends on your unique combination of essentials and luxuries. Your agent can help you select a life insurance policy that fits your specific situation. There are a number of life insurance options available to fit nearly every budget, every lifestyle, every schedule and every need.

Information provided by Lora Ahrens Olerich, Farm Bureau Financial Services, 515-433-2000.

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