When I’m discussing life insurance with clients I like to ask them how much money they think they will need to carry on living the way they currently are if either a primary income earner or primary caregiver was to pass away or be unable to ever work again. The figure they come up with is almost always far less than the actual amount needed. It is estimated that it takes the average family at least five to seven years to get their finances back on track after the death of a primary breadwinner.
When answering my question, most clients take into account the clearing of all or part of their current debts, and many take into account the potential expenses such as medical and funeral costs. What very few clients include in their calculations is the replacement of lost income. Your ability to either earn an income and/or provide care for your family is in most cases your biggest asset. A good life insurance strategy takes into account all of the aspects of your current lifestyle and provides a means of maintaining that lifestyle should something unfortunate happen. This process is sometimes referred to as determining a client’s “human life value”. Take a married couple with children for example. One parent is the primary income earner and one is the primary carer of the children:
Primary Income Earner – If this person was to pass away or become permanently disabled, the family immediately faces costs such as funeral and possible medical expenses. The family has also lost the majority of their household income which greatly affects their short term and long term financial goals.
Primary Caregiver – If this person was to pass away or become permanently disabled, the family immediately faces funeral and possible medical expenses. The family now needs to manage the new and substantial cost of providing care to the family, particularly the children.
The above examples are only a small part of what needs to be considered when determining your human life value. Everyone’s scenario is different, and everyone has different lifestyle goals. Contact Jasper Financial to discuss the value of your life.