178-How Much Life Insurance Do I Need? A Simple Tutorial On How To Calculate A Life Insurance Needs Analysis For Yourself
Radical Personal Finance
Joshua J. Sheats, MSFS, CFP, CLU, ChFC, CASL, RHU, REBC, CAP
4.2 • 1.9K Ratings
🗓️ 8 April 2015
⏱️ 45 minutes
🧾️ Download transcript
Summary
Today's show gives you the tools you need to sit down and calculate an appropriate amount of life insurance coverage for you to own.
On Episode 173, I discussed the three primary ways of calculating an appropriate amount of insurance:
- Human Life Value approach
- Needs Analysis approach (the best)
- Rule of Thumb approach
This show teaches you how to calculate a Needs Analysis.
The process is simple:
What You Want - What You've Got = What You Need
In order to figure out what you want, simply make a list of everything you want for your family in case of your death.
Divide that list into:
- Lump Sum needs (immediate cash)
- Income needs (ongoing cash)
For the income needs, decide:
- How much?
- For how long?
- Liquidating approach or a non-liquidating approach?
Enjoy the show!
Joshua
Links:
- Episode 173: http://radicalpersonalfinance.com/173-economic-basis-of-life-insurance-and-individualfamily-uses-of-life-insurance/
- Episode 101: http://radicalpersonalfinance.com/how-to-calculate-how-much-you-need-to-save-for-your-kids-college-rpf0101/
- Support Radical Personal Finance! http://radicalpersonalfinance.com/patron
Transcript
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| 0:00.0 | Radical Personal Finance is brought to you today thanks to the support of individual |
| 0:04.8 | listeners just like you. |
| 0:07.7 | These individual listeners contribute whatever monthly amount they feel the show is worth. I invite you to think |
| 0:16.7 | through the value of the content of this show and become a patron yourself. You get to pick how much. Just do it based upon the value of |
| 0:26.1 | the show in your life. Details can be found at radical personal finance.com slash patron. |
| 0:44.0 | Today we continue our Finance. a simple needs analysis for life insurance. This will help you to figure out on a back of a napkin exactly how much life insurance coverage |
| 0:49.0 | you should have for your financial plan. Welcome to the Radical Personal Finance Podcast. My name is Joshua Sheets and I'm your host and yes we continue today with the |
| 1:16.9 | long anticipated discussion of life insurance but I've got to do it systematically. |
| 1:21.6 | I promise I promise as many of you requested, |
| 1:23.8 | I will cover the debates that happen |
| 1:25.9 | in the life insurance industry, |
| 1:27.0 | but don't you think first we should start |
| 1:29.5 | with a simple answer to how much |
| 1:32.4 | and then handle the debates. |
| 1:34.0 | It's very important for you to approach financial planning questions in a systematic manner |
| 1:45.7 | because you approach them in a systematic manner with the background of information and a background |
| 1:50.9 | of insight and just a framework for how to approach the planning question, |
| 1:56.0 | you will quickly be able to understand what people should do in a given set of circumstances. |
| 2:02.0 | On last week's episode... people should do in a given set of circumstances. |
| 2:03.0 | On last week's episode, last Wednesday, |
| 2:06.0 | I released episode 173, |
| 2:08.0 | and that was the basis of life insurance, |
... |
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