Part of the planning for your estate includes insurance, like life insurance, disability insurance and long-term care insurance. Today I’ll take a look at planning with life insurance.
In other words, start with all current debts and assume you need enough insurance to cover that amount. Then, you’ll need enough to provide an investment portfolio large enough to provide the desired annual income. Being conservative and assuming the ability to take 4% annually from the portfolio means the insurance amount will have to be 25 times the annual income desired. Thus, providing a $100,000 income requires $2.5 million of insurance.
Also consider that if you have been good about saving for retirement, you may only need enough insurance to bridge the gap between now and your spouse’s retirement.