Life Insurance Broker Explains How Much Life Insurance to Purchase
As an experienced Life Insurance Broker, I often get questions from Physicians and Dentists about how much life insurance they should get. The amount of life insurance can be determined by very fancy calculators that go through all of the various expenses that we have now and in the future.
Unfortunately, most of us think about life insurance as this lump sum that we just won in the lottery when that, in fact, is not how it would work. If we’re working and we receive $1,000,000 tax-free, that’s a lot of money. If suddenly you have to take that $1,000,000 and convert it into income, now we see a challenge and that money does not look as big as it was before.
With $1,000,000 in today’s environment if you went to the bank, they’re only paying 1%-2% on that money. You need to be conservative as this is the last money this person will earn.
A Life Insurance Broker might be able to find a conservative portfolio where you receive maybe 5% let’s say. That 5% equates to a $50,000 income from that $1,000,000 without going into the principal. If you need to go into the principal every year, that $50,000 is being reduced by the fact that the balance has been reduced.
You want to make sure that you have enough to replace your standard of living, to make sure the kids go to the same schools, you don’t have to move out of your house, and you don’t have to change your plans. I think it’s important to keep that balance as much as possible because that balance will be the money that can be for college education for the kids or continued retirement income for your spouse.
If you are a physician or dentist and have questions about how much life insurance you should get, contact our professional Life Insurance Brokers. Let our experience work for you.
This educational blog was brought to you by Dedicated Life Insurance Broker Michael J. Bruno, seasoned Chartered Financial Consultant, Chartered Life Underwriter and Registered Health Underwriter. Specializing in financial planning and life insurance for physicians and dentists for over 30 years.