How much life insurance you need depends on many different factors, including, where you are in life, the size of your family, and your income and savings. Many young families don’t carry enough life insurance. Here are some factors to consider in deciding whether you have enough:

• How much of your salary does your family use to meet necessary expenses? If you were to pass away, how much financial support would your family need to meet its financial obligations, and for how long?
• What would your family’s immediate financial needs be paid if you passed away? This includes joint debts and continuing family expenses. Do you have savings to cover these expenses, or should your life insurance be used for these items?
• Do you want to leave money behind for your children’s college education? How about as an inheritance? Do you have money saved for this, or do you need life insurance for this purpose?
• Are you a single-breadwinner family? If so, does the stay-at-home spouse have life insurance? This is one area in which many young families are under-insured. Consider the amount by which your family’s expenses would increase if the stay-at-home spouse passed away: would you have to pay for a nanny or a housekeeper? Would the working spouse need to take time off to be at home with the children? All of these considerations factor in to life insurance calculation.

How much life insurance is right for your family is a very individual decision. Many financial advisors offer a complimentary life insurance analysis, so that you can determine whether your current life insurance policy meets your needs – and whether it’s the most cost-effective choice for your family.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

You hear a lot about the fact that you need life insurance, but what exactly is it used for? Once a loved one passes away, there are actually long-term and short-term uses for life insurance, as well as benefits for owners of family businesses.

Long-Term Uses

When they’re thinking about buying life insurance, people often focus on the “big picture” uses for the funds. These include:

• Paying off a mortgage
• Paying for college or private school tuition
• Allowing a spouse to leave work to stay at home – long-term – with young children

Short-Term Uses

Life insurance proceeds are also there to get your family through those first, painful weeks and months after the loss of a loved one. The short-term uses of life insurance include:

• Covering final medical bills
• Paying funeral expenses
• Covering household bills

Be careful! Before you use life insurance to pay bills or debts on behalf of a deceased loved one, check with an estate planning attorney to make sure that it’s appropriate to pay these items with life insurance proceeds.

Business Uses

If you own a business, life insurance proceeds can be part of your succession plan, helping with the successful transition of a new family member into the leadership role, and making sure that your business stays afloat during the process.

Estate Tax Concerns

Of course, if you’re concerned about estate taxes, you’ll want to talk to an estate planning attorney about establishing an Irrevocable Life Insurance Trust. This type of trust can remove the value of your life insurance policy from your estate, while still providing the full benefit of your policy to your loved ones.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.