Is not uncommon to see policies constructed incorrectly relating to ownership, premium payer and beneficiary arrangements.  This is further complicated as most States now require that the relationship designation be both current and correct.  For example, this avoids an ex-spouse receive proceeds, however it does not automatically include a new spouse.  Normally policy payments upon death are paid income tax free but can easily become taxable if not properly designed. 

There are a few “rules of thumb” about how much life insurance is adequate, the most common being 10 times the insured's annual salary.  The problem with that methodology is that it assumes everyone has the same amount of assets and debt load.  Therefore, this method is not a sound way to approach the question of how much life insurance is necessary.

A more effective way to determine the correct amount of life insurance is to use the Life Happens Calculator link below. By answering a few questions, it is simple to obtain an accurate assessment of specific insurance needs.  Don’t forget to run an analysis for a stay-at-home mom because employees that are available to work 24/7 are very expensive to replace. You may be surprised at the amount required.

Calculate Your Human Life Value