Typically the greater of $15,000 or 4% of your estate. This would include uncovered medical costs, funeral expenses, and final estate settlement costs. Note: If your estate is over $1,500,000 your final expenses may be much higher due to federal and state estate or inheritance taxes.
Mortgage payment fund: Whether or not your survivors would use life insurance proceeds to pay off the mortgage right away, creating a fund to cover mortgage payments makes sense.
College funding: Total projected college costs (tuition plus all other costs such as room and board, books, etc.), less current funds in the child’s name. The tuition amount being used is for the average 4-year education and is provided by The College Board, which is $158,072 for private institutions and $71,440 for public institutions.
Total amount your family needs, before taxes, to maintain their current standard of living, typically 60%-75% of total income. Families with higher incomes typically fall into the lower end of that range.
Includes bank accounts, money market accounts, mutual funds, CDs, bonds, stocks and other assets.
Includes 401(k), Keoghs, pension and profit sharing plans.
Includes individual policies, group term coverage available through work, and any other life insurance on your life payable to your family or for the benefit of your family. Do not include accidental death insurance or “double indemnity” insurance.
Marginal tax rate: This is the rate of tax you are paying on your highest dollars of income. For instance, in 2013 a married taxpayer earning $50,000 has a Marginal Tax Rate of 15%. That’s because earned income between $72,500 and $146,400 gets taxed at 25%. The lowest Marginal Tax Rate is 10% and applies to couples who earn less than $17,850. The highest Marginal Tax Rate is 39.6% for dollars earned in excess of $450,000.
Should you die, the financial impact on your dependents is the loss of your income as well as the immediate expenses associated with your death. The death benefit offered through life insurance serves as replacement income for a period of time to help your family build a more financially secure future.