Financial Planning on Your Own
"The simple way to gain control of your money and financial independence"
by
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Chapter IV
How Much Life Insurance I need?
There are also two ways to calculate this amount, one on the NEEDS basis and the other one on the HUMAN LIFE VALUE. It is useful to know because it is as bad to be underinsured as it is to be over-insured; money overpaid in premiums of insurance that is not needed can be used for other goals.
Without getting into details lets use a simple way of calculating this. Your NEEDS basis is basically what you will need to leave in case you die so your family can take care of immediate and short term liabilities and other personal responsibilities. Let’s set an example; add up all your liabilities (CC, Mortgages, Cars, medical bills, etc), plus funeral expenses and any other short term goal that the surviving spouse will have trouble covering (college payments for a child almost into college)
Usually can be covered with a Term Insurance or a combination of Term and Permanent since the liabilities will go down overtime and the Term policy can be changed annually (that way you can save money on premiums) (There are 1, 3, 5, 7, 10, 15 or 20 year terms, take the one that is equal to the length of your liabilities)
Liabilities ($450,000) + funeral expenses ($15,000) + college for child A and first two of child B ($120,000) = $585,000
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About the Book
So, you want to get your goals on track, get your finances in order, save and invest (without loosing too much sleep), keep track of your goals and progress and know more about your options out there without dealing with your average go-getter, commission-based financial advisor? Well, you bought the right book.
Being that the main problem is lack of information. Knowledge empowers you to make a decision without doubting yourself. Remember that there is no right or wrong decision, just the consequences of them. This process will help you know the options and their consequences so you can act accordingly, in order to accomplish your personal goals.
By no means have I disregarded the advantages of advice and consulting, successful people often spend good amount of time and money getting advice from others. However, at certain stages of your life all you need a good foundation of information that will allow you to get further at a safe pace and come out in better shape than the current average person. This book will give you that.
This book will provide you the tools so you can lay down the basic foundation blocks to build your future on. It will also show you the steps to follow so you can complete those goals and dreams with the least amount of bumps. I will not lie to you, it will take time, discipline and yes, some sacrifices on your behalf; but at the end progress will be measurable, clear and rewarding.
About the Author
As he started in the Financial Industry his goal was always helping his clients and to build a long-term relationship with them, money and sales where always important, however, learning and doing right thing where always above all...
...He always tells people: “Never take for granted what you get sold, do your due diligence. The fast paced red bull infused brokers are as much to blame as the client that do not do their own research”; “Take second opinion on your finances, I do it medically, I always seek for a second opinion of any ailment I have…and if we do that with our health, why not with our money? at the end it is your money, it is your right to question”.
By the end of 2008, after reviewing the news, documentaries and personal anecdotes of how some people just where there to take advantage disregarding any economic rules or common sense, thank that if all clients had at least a fraction of the information he knew, their choices would have been better.
That is basically how the idea of this educational project came to be. Part of our challenge right now as a generation is to get this information out to the public, but most of all to those starting their independent lives.
If we do not help this upcoming generations to be better positioned to withstand the rough uphill head of us in the next decade...we will be the ones to blame if this is repeated 10 years from now.