MONEY MATTERS: How much insurance should I buy?

Money Matters

How much insurance should I buy? Give us some input on that.

That's a great question. There's a lot a variables that go into that. And there's no hard and fast answer for anyone. The things you have to look at, how much debt you want do you have. What type of income do you want to leave your spouse? Do you have kids? Do you want to leave aside a college fund if you're gone for the children? So there's just a lot of different things that go into that and it takes more then people think. I've been doing this 30 years and it use to be a smaller number. For example, when someone passes away and their desire is to leave fifty thousand a year for their family well you could do some math and if I invest in that five percent, it takes a million dollars to produce that kind of revenue for them. But there is a rule of thumb I've heard since I've been doing planning. A person should have seven to ten times their income if there is a large rule of thumb.

One of the other questions is, should I buy life insurance for my kids and there's arguments on both sides of it?

You can argue it both ways. I've been a big advocate of it. I bought it when my kids were little. The arguments against it is well your child isn't bringing in an income right and their not. However, we've had some unfortunately, we know their kids have passed away and it really helped them take a break in life. And the other thing is you're guaranteed insurability on that kid at a very young age. It's a lot cheaper. When the get little and maybe they're teenagers when they find out they have a health problem and they're uninsurable forever. I've had that happen lots of times.

It seems like people argue you should take that money and invest it.

And you can argue that. Depends how you set it up. Plans that will build some cash value generally it's not going to beat the stock market however theirs no risk in it either. Just protecting the child throughout their life you can do some nice things for them at a very young age.