Choosing the right life insurance death benefit can be as simple or as complex as you want it to be. It’s just a matter of determining who your intended beneficiary is and then deciding what you want to help them do after you’re gone.
Choosing a Beneficiary
The person (or people) you choose as beneficiary will drive the decision surrounding the amount you need. If your beneficiaries are individuals who rely on you to support them, then you may want to make sure that your policy will pay enough to replace several years’ salary.
If, on the other hand, the beneficiary is going to be a distant relative or friend handling your arrangements, you might just want to choose a benefit that will pay for your final expenses.
How to Help Your Beneficiary
Your life insurance benefit can help your heirs in many different ways. You may want to ensure that your policy helps your children pay their college tuition expenses or assists your spouse in paying off debt. You may want the money to fund your surviving spouse’s retirement or to help your family go through counseling to deal with your loss. If you anticipate your estate being subject to estate taxes, then you may want to add that to the total death benefit as well.
Stay-at-home parents might want to provide enough in death benefits that their surviving spouse will be able to afford to hire support service providers who can do the things the deceased spouse once did, such as laundry, after-school child care, meal preparation and so on.
Considering Your Legacy
Another consideration in determining your death benefit is the kind of legacy you want to leave behind. If you want to leave money to your favorite charity or organization, set your children up with a trust fund that can help them finance their own family expenses far into the future or to provide a small, short-term scholarship to would-be students of your favorite educational institution, you can add this amount to your policy benefit.
At Kramer Wealth Managers, we can help you determine the objectives you have for your life insurance policy. We can walk you through the various options available to protect yourself and your loved ones through death benefit, riders, and cash values. Contact us today so we can get started.
