Recent volatility and changes in the world of finance have probably affected your investment accounts and, quite possibly, the value of your real estate holdings as well. Have you considered that these changes may have increased your need for life insurance?

Impact on net worth and feelings of financial security
Many factors are at play when determining how much life insurance you may need. No single formula or rule of thumb can be applied universally. But, regardless of the methodology employed to calculate the amount of life insurance you need, your current assets and debts should be part of the analysis.

Like most individuals, you are probably relying on your investment accounts, in addition to other assets, to provide liquidity and cash flow for your heirs after your death. Unfortunately, market downturns can have a sizeable impact on asset values. That, in turn, can result in a shortfall in the total dollar amount you intend to pass on to heirs at your death.

Increasing your life insurance coverage may be the most prudent and cost-effective way to make up for the shortfall. It can also make you feel more confident in your financial future. A landmark research study commissioned by First Command revealed that feelings of financial security increase when life insurance is sufficient to cover family debt and family income until retirement.

What’s the objective?
In assessing your life insurance needs, first consider what it is that you want your life insurance to accomplish. Think in terms of income. How much do you want to provide? Some individuals strive to generate an income sufficient to provide totally for their families. Others, however, determine that the goal is simply to supplement a survivor’s salary or some other income source.

The duration of a projected income stream also has a significant impact on the assets your survivors will need. Should the income continue until the kids have completed college? Or throughout your spouse’s lifetime? You’ll want to consider immediate needs, such as monthly bills, and one-time expenditures, such as paying off debt, in the analysis.

Your insurance needs are as unique as your financial situation, risk temperament and long-term goals. Your First Command Financial Advisor can help you update your insurance strategy to protect the things and provide for the people most important to you. Insurance products and services are offered by First Command Financial Services, Inc. In certain states, First Command Financial Services, Inc. is a separate domestic corporation and does business in California as “First Command Insurance Services”.

Sentient Decision Science, LLC was commissioned by First Command to compile the Financial Behaviors Index.