The following information is intended to provide you with a basic overview of the most common financial situations and the methods used for calculating a justified amount of coverage. Every case should be accompanied by a detailed cover letter. The Cover letter should explain the need for coverage and how the amount was determined.
Purpose of Insurance – Personal – replacement of income
The following guide should be considered:
Age 20–35 Factor of earned income 20 to 30
Age 36–40 Factor of earned income 15 to 25
Age 41–45 Factor of earned income 14 to 20
Age 46–50 Factor of earned income 12 to 20
Age 51–59 Factor of earned income 10 to 15
Age 60–64 Factor of earned income 7 to 10
Age 65–70 Factor of earned income 4 to 10
Age 70+ Factor or earned income 4 to 5
Up to 50% of working spouse coverage with a maximum of $1 million. Some carriers are more liberal.
Up to 50% of parents’ coverage.
*Some carriers only offer maximum of $250,000.
Personal Debt Protection
100% of home loan. 50% to 75% of loan balances for other credit vehicles.
Business Debt Protection
50% to 75% of loan balance.
Up to 10 times annual income.
Percent of ownership multiplied by the corporate (fair market) value
Estate value appreciation at 6% for one-half the greatest life expectancy or 8 to 10 years.